North Korea economy shrinks most since 1990s famine: Seoul

AFP Seoul Jul 26, 2019, 01.35 PM(IST)

A North Korean flag is seen hanging on a building at the Winter Olympics athletes village in Gangneung, South Korea, February 8, 2018. Photograph:( Reuters )

Story highlights

North Korea, which holds most of the peninsula's mineral resources, was once wealthier than its southern neighbour, but decades of mismanagement and the demise of its former benefactor the Soviet Union have left it deeply impoverished.

North Korea's sanctions-hit economy shrank in 2018 by its largest margin since the country's devastating famine in the 1990s, the South's central bank said on Friday.

North Korea, which holds most of the peninsula's mineral resources, was once wealthier than its southern neighbour, but decades of mismanagement and the demise of its former benefactor the Soviet Union have left it deeply impoverished.

The isolated nation saw its gross domestic product contract 4.1 per cent last year, the second consecutive year of decline after a 3.5 per cent slump the year before, Seoul's Bank of Korea (BOK) said.

It was the worst drop since 1997, during the peak of a nationwide famine that saw hundreds of thousands -- some estimates say millions -- die of starvation.

The North does not publish economic statistics of its own, leaving outside estimates as the only available figures for its financial performance. 

The UN Security Council in 2017 banned North Korea's main exports -- coal, fisheries and textile products, among others -- to cut off its access to hard currency in response to Pyongyang's pursuit of nuclear weapons and ballistic missiles.

The sanctions cut the North's exports by more than 85 per cent last year while the country's international trade fell in value by nearly half, the BOK said.

"On top of the sanctions, which really affected the North's export of textiles and minerals, we also think last year's heatwave played a factor in its agriculture industry," a bank official told AFP. 

The country's gross national income in 2018 was estimated at 35.9 trillion won ($30.35 billion) -- just two per cent of that of the South.
Its per capita income was $1,119 last year, while the South's was 26 times higher, according to the BOK.

Despite historic summits between North Korean leader Kim Jong Un and US President Donald Trump, nuclear negotiations between the two countries remain stalled, with the North firing two short-range missiles into the sea on Thursday.