North Korea’s GDP Shrank in 2010, South’s Central Bank Says
November 03, 2011, 8:32 PM EDTBy Eunkyung Seo
(Adds economy contracted in four of the past five years in ninth paragraph, dependence on China in 12th paragraph.)
Nov. 3 (Bloomberg) -- North Korea’s economy shrank for two consecutive years as cold weather and rain hurt farming and power and raw material shortages cut industrial output, South Korea’s central bank said.
Gross domestic product contracted 0.5 percent in last year after a 0.9 percent decline in 2009, according to an estimate published by the Bank of Korea in Seoul today. Measured using nominal gross domestic product, a figure that isn’t adjusted for inflation, North Korea’s GDP totaled 30 trillion won ($26.5 billion) in 2010, compared with South Korea’s 1,173 trillion won, the central bank said in an e-mailed statement. North Korea’s per capita income was 1.24 million won while South Korea’s was 24 million won, according to the estimate.
“Major industries were hampered by bad weather, poor energy and raw material supply, and the international economic sanctions on the country,” the Bank of Korea said.
North Korea has relied on economic handouts since the mid-1990s when an estimated 2 million people died from famine, according to South Korea’s central bank. The United Nations and the U.S. last year increased economic sanctions imposed on the country as a result of its nuclear weapons activities after attacks that killed 50 South Koreans.
South Korea, whose economy is 40 times larger than North Korea’s, plans to set up a fund as early as this year to begin raising as much as 55 trillion won to pay for eventual reunification with North Korea, the South Korean Unification Minister Yu Woo Ik said in an interview with Bloomberg earlier this week.
Nuclear Program
The fund would meet the minimum cost of unification estimated by external researchers, assuming it takes place within the next 20 years and is a peaceful transition. Yu said the cost may be as high as 269 trillion won, or almost a quarter of South Korea’s 2010 gross domestic product.
North Korea and South Korea remain technically at war after their 1950-1953 conflict ended in a cease-fire. Six-nation talks on North Korea’s nuclear program, involving China, Japan, Russia, the U.S. and South Korea, haven’t convened since 2008. U.S. and North Korean officials resumed direct talks last month.
The UN increased sanctions banning trading in weapons and restricting financial transactions after North Korea carried out its second nuclear test in May 2009. The country’s first test occurred in 2006.
Intelligence Reports
The nation’s economy has contracted during four of the last five years, according to data collected by the Bank of Korea.
North Korea doesn’t release official economic data. South Korea’s central bank releases an annual estimate of North Korea’s economic growth, based on information from the National Intelligence Service of South Korea and other related organizations.
North Korea’s population rose to 24.19 million last year from 24.06 million in 2009, about half of South Korea’s. Inter- Korean trade rose 13.9 percent from a year earlier to $1.9 billion last year, South Korea’s central bank said.
North Korea relies on China to prop up its economy, with bilateral trade accounting for 83 percent of the country’s $4.2 billion in international commerce last year, according to the Seoul-based Korea Trade-Investment Promotion Agency.
North Korea’s exports, except for shipments to South Korea, rose 42.5 percent to $1.5 billion last year, driven by minerals, base metals, and textiles, according to the Bank of Korea. Imports increased 13.2 percent to $2.7 billion in 2010, the central bank said.
Agriculture and fisheries account for 20.8 percent of North Korea’s industry compared with 2.6 percent in South Korea. Manufacturing took about 22 percent in North Korea, less than South Korea’s 31 percent, according to the central bank.
--Editors: Brett Miller, Paul Tighe
To contact the reporter on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net;
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
