By Lee Minji
SEOUL, Feb. 2 (Yonhap) -- North Korea's economic growth may reach up to 12 percent annually in the coming years if the country moves to integrate itself into the global economy, a report showed Thursday.

   The report comes amid mixed forecasts on the course of the North Korean economy following the rise of its new leader Kim Jong-un. While skeptics say market opening is still a low possibility, others have raised views that the young and overseas-educated leader may take steps toward economic reform that could open the country economically.

   If the North decides to open its economy, the communist regime may see an annual growth of 10-12 percent, which would bring the income gap between the two Koreas down to 3.2 fold in 40 years, compared to the 40-fold difference that may exist if no reform efforts are taken, according to the Bank of America-Merrill Lynch report.

   The report, cited by the Korea Center for International Finance said the communist regime is likely to achieve sharp economic growth if it follows the steps of other emerging economies that decided to join the global economy.

   It, however, added that a market opening does not translate to reunification since the North may opt for a partial open market system like China.

   If the communist regime shuns complete liberalization and adopts measures that limits market opening, the income gap between the two Koreas can be narrowed to around 7.1 fold, according to the report.

   Meanwhile, Bank of America-Merrill Lynch said North Korea's entry into the global economy can help South Korea resolve the so-called "Korea discount."

   "Easing tension over the Korean peninsula is likely to cut South Korea's funding costs. The North's abundant labor and South's capital are also likely to create synergy effects," it said.

   North Korea's population growth, backed by its economic growth, is expected to help delay South Korea's rapid aging and boost its financial health, the latest findings said.

   South Korea is one of the world's fastest aging countries with one of the lowest birthrates in the world. Such developments could seriously affect the country's long-term growth potential.

   mil@yna.co.kr
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