North Korea’s Economy Showed Some Resilience Before Pandemic
North Korea’s Economy Showed Some Resilience Before Pandemic
(Bloomberg) -- North Korea’s economy managed to eke out growth last year, rebounding from the worst contraction in decades, but the situation has likely deteriorated as the pandemic forced the country to shut its borders.
Gross domestic product increased 0.4% in 2019, according to estimates released by South Korea’s central bank on Friday. The rebound follows a 4.1% contraction the previous year as international sanctions took a toll on North Korea’s output.
The expansion shows North Korea may be learning to survive under heavy international sanctions and secure the financial wherewithal to continue its pursuit of nuclear and missile programs. Economic prospects for this year have become even more dismal, as the pandemic hurt North Korea’s biggest economic partner, China, and decimated what little external trade it had.
North Korea has joined the world in quarantine efforts against Covid-19 even though the state has so far denied any confirmed cases. Japanese Defense Minister Taro Kono said last month that he believes the disease may be spreading there and Kim Jong Un is keeping to himself to avoid infection.
North Korea’s exports rose 14% in 2019 to $278 million, mostly due to the base effect of a weak performance in 2018 when sanctions intensified, the Korea Trade-Investment Promotion Agency in Seoul said this week. Imports jumped to $3 billion, worsening the country’s trade deficit.
More than 95% of North Korean trade is with China. China has beefed up its enforcement of sanctions since the Pyongyang regime’s sixth nuclear test in 2017.
Due to sanctions that ban shipments of North Korean minerals and fabric, its key exports have shifted to clocks and components, according to the South Korean trade agency.
Per capita income in North Korea was estimated at 1.41 million won ($1,184) in 2019, or about 3.8% percent that of South Korea, the BOK said.
North Korea in June blew up a building meant to symbolize friendship with South Korea, an act that some analysts interpreted as its way of demanding help amid sanctions and the pandemic-driven trade halt.
Below are further details from the Bank of Korea, which bases its calculations on data from South Korea’s government agencies:
- The agricultural and fisheries industry grew 1.4% last year, aided by better weather conditions
- Mining -- a key source of income until sanctions took effect -- shrank 0.7%.
- Manufacturing contracted 1.1%, while the services industry grew 0.9%.
©2020 Bloomberg L.P.