Millennium Post

North Korean economy in doldrums

Given its totalitarian manifestations, irreversible effects of sanctions, dearth of investments and trade and warped priorities, it should hardly be surprising that the economy of North Korea, should constantly be heading South. In so controlled a regime where the masses toil to remain ill-fed, this is a country that could do with plenty of sprucing up starting with its economy. Indeed, North Korea's economy has shifted into reverse following the introduction of crippling international sanctions targeting its nuclear weapons programme. Estimates released by South Korea's central bank show that North Korea's economy shrank by 3.5 per cent in 2017. This year is likely to be even direr. The isolated state does not publish its own growth figures. That is only to be expected. But South Korea has been compiling annual GDP estimates about its neighbour since 1991. The contraction is a sharp turnaround from 2016, when North Korea's economy expanded by an estimated 3.9 per cent. It's also the worst performance since 1997 when Seoul estimated that North Korea's economy shrank 6.5 per cent amid widespread famine. The data for 2017 show that North Korean exports of products such as coal, iron ore and textiles, plunged almost 40 per cent to just $1.8 billion. The average annual income of North Koreans was just 5 per cent of that earned by people in the South, the central bank estimated. Some experts think the picture will be even bleaker in 2018. As matters stand, that is the inevitable scenario. "The economy is likely to get worse," said Kim Byung-yeon, an economics professor at Seoul National University and expert on the North Korean economy. "I estimate this year's growth rate can be at least minus 5 per cent if the sanctions are fully and thoroughly implemented." The United States pushed through a series of UN resolutions last year that significantly escalated the pressure on North Korea's economy in response to Pyongyang's repeated tests to advance its nuclear weapons programme. The UN sanctions have taken aim at North Korea's exports, banning the sale of coal, iron ore, textiles, and seafood. The Trump administration has also sought to deprive North Korea of the fuel it needs to keep its economy running. US measures have also sought to cut North Korea off from the global financial system, barring American banks from pursuing any financial transactions directly or indirectly with the country. China, which accounts for the vast majority of North Korea's foreign trade, has said it was enforcing the sanctions, despite skepticism from some analysts. Following a summit with North Korean leader Kim Jong-un in Singapore last month, President Donald Trump said that sanctions would only be removed "when we are sure the nukes are no longer a factor." He acknowledged that could take a long time.

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