N.K. economy shrinks for 2nd year: BOK

The North Korean economy contracted for the second straight year in 2010 due to tougher international sanctions and sluggish agricultural production, the South Korean central bank estimated Thursday.

The Bank of Korea estimated that the communist country’s economy shrank 0.5 percent on-year last year, compared with a 0.9 percent contraction in 2009. The data stood in sharp contrast to the 6.2 percent expansion of the South Korean economy in 2010.

The North Korean economy grew 3.1 percent in 2008 on one-off factors after shrinking 1 percent in 2006 and 1.2 percent in 2007, when heavy flooding hit its agricultural production and its relations with the international community deteriorated.

“Last year, the North Korean economy contracted as economic conditions at home and abroad worsened amid energy shortages and international sanctions and its manufacturing sector remained sluggish,” said Park Yung-hwan, an official at the BOK.

North Korea suffers chronic food and energy shortages due to years of isolation, mismanagement and natural disasters. The communist state has relied on international handouts since 1995 to help feed its more than 20 million people.

Last year, inter-Korean relations turned sourer following the North’s deadly sinking of a South Korean warship in March and its shelling of a border island in November.

The North’s agricultural and fishery industry contracted 2.1 percent last year from a year earlier, more than double the 1 percent fall of 2009. Its manufacturing sector declined 0.3 percent in 2010.

North Korea’s nominal gross national income amounted to 30 trillion won ($26.5 billion) last year, which is only 2.56 percent of South Korea’s GNI of 1,173 trillion won.

Meanwhile, inter-Korean trade grew 13.9 percent on-year to $1.91 billion, the BOK said.

Park said although chilly inter-Korean relations and following economic sanctions cut off trade such as humanitarian aid, shipments of goods produced at the Kaesong industrial complex rose.

The value of North Korean products shipped the South reached $1 billion last year, up 11.7 percent from the previous year. South Korean shipments to the North grew 16.6 percent to $868.3 million. 

(Yonhap News)