Pyongyang felt the pinch in 2017

Home > Business > Economy

print dictionary print

Pyongyang felt the pinch in 2017


The North Korean economy suffered its biggest drop in two decades last year, hit by tougher economic sanctions in response to nuclear and missile tests carried out between 2016 through 2017.

The Bank of Korea said on Friday that the North’s gross domestic product contracted 3.5 percent throughout 2017, marking the largest contraction since 1997, when the communist state underwent the so-called great famine era. At the time, North Korea’s gross domestic product fell 6.5 percent based on the central banks’ estimates.

The downbeat record is a dramatic reversal from the previous year when the country recorded a firm 3.9 percent growth.

The Bank of Korea noted that new economic sanctions from the UN Security Council are the major factor that halted the production of mineral resources including coal and manufacturing goods.

“Multiple UN sanctions took effect from 2016 through 2017,” said Shin Seung-cheol, head of the national accounts coordination team at the Bank of Korea.

“The UN Security Council further strengthened the sanctions in 2017 as it scrapped exemptions on the ban on the export of coal and steel produced from North Korea. The number of banned imports also increased to include textiles,” Shin said.

Industrial production shrank 8.5 percent last year compared to the previous year, again the lowest in 20 years.

Of the industrial production, analysts believe that coal is among the hardest hit.

China, a major export source for Pyongyang, also moved to halt all coal imports from the North in 2017. Coal shipped to China constituted a large portion of North Korea’s exports as the resource used to take up 45 percent of the country’s total exports.

Jeong Hyung-gon, a senior research fellow at the Korea Institute for International Economic Policy, projected that North Korea’s export volume fell 66 percent last year compared to 2016 after the UN Security Council imposed a coal ban in Resolution 2321.

Another culprit behind low growth is a drought that ravaged the country last summer. The drought, considered to be the worst in two decades, posed challenges to crop harvesting and feeding many of the 25 million North Koreans.

“The drought affected the production of crops last year,” said Shin.

Shin added that the shortage of rain also impacted the North’s ability to provide electricity using hydroelectric power. The combined production of water, electricity and gas declined 2.9 percent.

“The output of thermoelectric power increased, but hydropower production plunged by a large margin,” said the Bank of Korea in a statement.

Output from agriculture and fisheries businesses dropped 1.3 percent in 2017 compared to a year earlier.

The construction industry also saw a 4.4 percent decline while the manufacturing sector dipped 6.9 percent.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)