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North Korea’s economic slide picks up speed

June 19,2008
North Korea’s economy shrank 2.3 percent in 2007 from a year earlier, its second straight year of contraction as devastating floods hit harvests, the South Korean central bank said yesterday.

The Bank of Korea estimated that the country’s gross domestic product shrank more than twice as much as the 1.1 percent contraction in 2006. The 2006 slide was the first in eight years and was due mainly to worsening international relations following its first nuclear test and severe flooding. North Korea’s economic growth was estimated from information given by various institutions including the National Intelligence Agency.

“Last year the North Korean overall economy suffered difficulties as a fall in agricultural production deepened its food shortage,” the central bank said in a report.

The gap between the economies of the two Koreas is growing ever wider. The central bank said North Korea’s nominal gross national income was 24.8 trillion won ($24.2 billion) last year, just 2.8 percent of South Korea’s 902.5 trillion won. North Korea’s per capita GNI is 1.1 million won, only 5.7 percent of South Korea’s 18.6,626,000 won.

The North, with 23.2 million people, has less than half the population of the south, with 48.5 million. North Korea’s agricultural sector contracted 9.4 percent last year from a year earlier, much greater than the 2.6 percent fall in 2006, the bank said. A bright spot is growth in the service industry ? the number of international tourists, including South Koreans, visiting Mount Kumgang increased to 377,000 last year from 266,000 in 2006.

North Korea exported $920 million in goods, such as ore and minerals, last year. It imported $2 billion in products like cars and textiles. Of the North’s total trade, that with South Korea made up $1.8 billion.

Since a full-scale famine in the mid to late 1990s that killed hundreds of thousands, the North has relied on international aid to help feed its 23 million people. Severe food shortages have been reported this year. A recently obtained North Korean government document indicates that the country is facing grave food shortages, according to Good Friends, a South Korean organization working to help hungry North Koreans.

Aid groups say North Korea may see tens of thousands of people dying of starvation in two months if there is no emergency foreign aid. The Seoul government estimates the North needs at least 5.42 million tons of cereals annually but is 1.24 million tons short this year.

AFP, Yonhap


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