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NORTH KOREA NEWSLETTER NO. 218 (July 12, 2012)
*** TOPIC OF THE WEEK

North Korean Economy Registers First Growth in 3 Years in 2011

SEOUL (Yonhap) -- The North Korean economy is believed to have marginally grown last year on increased agricultural and fishery production after contracting for two straight years, South Korea's central bank said July 8.

   The Bank of Korea (BOK) in Seoul estimated that the socialist country's economy grew 0.8 percent on-year in 2011, compared with a 0.5 percent contraction a year earlier.

   The South Korean central bank had earlier estimated that the North's economy shrank for two years in a row. In 2009, it fell 0.9 percent, according to the bank.

   The 2011 data contrasted with a 3.6 percent expansion of the South Korean economy. South Korea registered 0.3 percent and 6.3 percent growth in 2009 and 2010, respectively.

   "Despite contraction in the manufacturing sector, the North's economy grew last year as agricultural production rose, aided by favorable weather conditions and a rise in the use of fertilizer," said Park Yung-hwan, an economist at the BOK.

   The BOK annually releases an economic growth estimate for the North based on data provided by Seoul's intelligence agency and other institutes specializing in North Korean studies.

   The North Korean economy has been in doldrums as it suffers from chronic food and energy shortages, mismanagement and natural disasters. The North has relied on international handouts since 1995 to help feed its 23 million people.

   The North's agricultural and fishery industry grew 5.3 percent on-year in 2011, a turnaround from a 2.1 percent contraction the previous year, the bank report said.

   Its manufacturing sector declined 3 percent last year after falling 0.3 percent in 2010. It breaks down to minus 0.1 percent for light industries and minus 4.2 percent for heavy and chemical industries.

   The North's mining industry increased 0.9 percent overall due to an increase in coal production of 2.0 percent, though the nonferrous mineral sector contracted 1.7 percent.

   The electricity, gas and water supply sectors also declined 4.7 percent, due mainly to poor thermal power generation.

   But the construction industry grew 3.9 percent as the country built a large number of residence buildings and apartments in Pyongyang in an effort to modernize the capital. Nevertheless, the construction of non-residence buildings decreased.

   Park said the North's construction boom is expected to continue this year, the target year for becoming a strong and prosperous country.

   The push toward the so-called Kangsong Taeguk or thriving nation was initiated by the late North Korean leader Kim Jong-il and set the year 2012 as the beginning of the prosperous era. The state goal was set to coincide with the 100th birth anniversary of the country's founding president Kim Il-sung.

   Meanwhile, the service sector grew 0.3 percent with moderate business activities in the fields of transportation, telecommunications, finance, insurance and real estate, and government services.

   According to the BOK data, 36.5 percent of North Korea's industries are in mineral and manufacturing; 29.4 percent are in the service sector; 23.1 percent are in agricultural, forest and fisheries; 7.9 are in construction; and 3.1 percent are in electricity, gas and water supply.

   North Korea's nominal gross national income (GNI) amounted to 32.4 trillion South Korean won (US$28.5 billion) last year, which is equivalent to 2.6 percent of South Korea's 2011 GNI of 1,241 trillion won, the bank said.

   Per capita income in North Korea was only 1,330,000 won last year, merely one nineteenth of South Korea's 24,920,000 won.

   North Korea's total trade last year excluding inter-Korean trade, however, reached $6.32 billion, an increase of $2.14 billion over the previous year.

   Exports soared 84.2 percent on-year to $2.79 billion while imports increased 32.6 percent to $3.53 billion.

   Inter-Korean trade fell 10.4 percent on-year to $1.71 billion, the bank said.

   Park said shipments of goods produced at a joint industrial complex in the North's border city of Kaesong accounted for most inter-Korean trade last year.

   Chilly inter-Korean relations and punitive international sanctions cut off the flow of humanitarian aid to the North, he said.

   The value of North Korean products shipped to South Korea declined 12.5 percent, while South Korean shipments to the North fell 7.8 percent, the BOK added.

   Earlier this year, South Korea's state agency said that the economic gap between two Koreas remained very wide.

   According to the data by Statistics Korea released on Jan. 17, South Korea's nominal gross national income (GNI) came to US$1.015 trillion at the end of 2010, about 39 times larger than the $26 billion tallied for the North.

   The South's per-capita GNI stood at $20,759, which is 19.3 times larger than the North's $1,074, the data showed.

   South Korea also outperformed the North in the volume of trade. Its trade totaled $891.6 billion in 2010, compared with $4.2 billion for the North, the data showed.

   South Korean companies exported $466.4 billion worth of products during the cited year, while imports came to $425.2 billion. The North's exports and imports totaled $1.5 billion and $2.7 billion, respectively.

   In industrial output, infrastructure and other areas, South Korea also stayed far ahead of its socialist neighbor.

   The South produced 4.27 million units of vehicles in 2010, compared with 4,000 cars manufactured in the North.

   Steel and cement production by the South came to 58.91 million tons and 47.42 million tons, much more than the 1.28 million tons and 6.28 million tons for the North, the data showed.

   The total length of roads in South Korea stood at 105,565 kilometers, 4.1 times longer than 25,950 kilometers for the North. Power generation by South and North Korea came to 473.9 billion kilowatts and 23.7 billion kilowatts, respectively.

   The North, however, outdid the South in coal production. It produced 25.5 million tons of coal in 2010, compared with 2.08 million tons for the South, according to the data.

  (END)
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