North Korea’s economy getting worse, says report

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North Korea’s economy getting worse, says report

North Korea’s economic conditions have worsened over recent years partly due to strained inter-Korean relations that resulted in less trade and aid from the South, a report showed yesterday.

When the North’s economic conditions are scaled against a benchmark of 100 from 1995, they worsened to 86.5 in 2009, according to the report by the Sejong Institute, a private think tank. The report was commissioned by Statistics Korea, the South’s statistics agency.

The index is based on 10 major economic factors including food supply, electricity production, trade and the financial situation of North Korea, the institute said.

The report showed the index peaked at 104.7 in 2007 when the North enjoyed strong trade with China. During that year, South Korea also expanded its aid to Pyongyang.

Conditions have worsened over the past few years, especially since President Lee Myung-bak took office with a hard-line stance on North Korea’s nuclear program.

Compared with the benchmark year of 1995, South Korea’s aid to the North has dropped to 36.2, according to the report.

Meanwhile, the North’s food production grew to 119 over the cited period, but its steel output shrank to 81.8, the report showed.

Coal and electricity production rose to 107.6 and 102.2, respectively. The total length of roads in the North increased to 110.8, while its trade volume grew to 166.3 over the cited period.

The North keeps a military presence that far outnumbers the South. North Korea had a total of 1.19 million military as of 2010, compared with 650,000 in the South, the report showed.

North Korea’s spending on its military came to $810 million, far smaller than South Korea’s $25.56 billion. But the ratio of North’s spending to its gross national income stood at 3.1 percent, higher than the South’s 2.52 percent.

The institute expected overall economic conditions in the North could worsen further under the fledgling and untested Kim Jong-un regime.

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