North Korea's GDP shrinks as trade slows
July 22, 2016
South Korea's central bank stated Friday that the North's economy shrunk for the first time in five years in 2015. It lost 1.1 percent of its GDP, more than any year since 2007.
Leader Kim Jong Un's pledged to prioritize economic growth as least as much as military matters, but the data suggest that its own military aggression and low commodity prices worldwide are making such growth difficult.
"The key reason for the GDP contraction looks to be trade as global commodity prices fell while China demand also declined," a Bank of Korea official said.
North Korea doesn't publish its own figures, so the South's central Bank of Korea relies on information compiled from state and private organizations to develop its a picture of the country's economic situation.
Trade troubles
Its estimates show that nearly all sectors outside of construction and services moved in retrograde last year.
North Korea's energy sector, for instance, contracted by 13 percent, largely due to a drought that sapped hydropower production.
Most strikingly, the country's international trade dropped 18 percent, the first contraction in this area since 2009. Trade fell in 2015 for its main commodity exports, coal and iron ore.
The situation is likely only to worsen, as North Korea was punished with tougher economic sanctions in March as a result of an uptick in provocations, including an atomic test in January. Even its most important economic ally China - which accounts for 91 percent of the North Korea's trade - was on board with the penalties.
jtm/hg(AFP, Reuters)