North Korean economy shrank by 3.5 percent in 2017 | News | DW | 20.07.2018
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North Korean economy shrank by 3.5 percent in 2017

North Korea's economy experienced its sharpest decline in two decades last year as international sanctions hit its mining and manufacturing sectors. Hard currency earning exports alone fell by one-third.

North Korea's GDP decreased by 3.5 percent in 2017, driven by international sanctions on Pyongyang's nuclear and missile programs, South Korea's central bank reported on Friday.

The contraction last year represented the biggest since 1997, when North Korea's economy plummeted 6.5 percent as the country suffered through a devastating famine that caused hundreds of thousands of deaths.

Read more:  North Korea: US, allies back sanctions until 'complete denuclearization'

"The negative growth is attributable to a drop in its mining output and a retreat in its heavy and chemical industries, as the United Nations imposed tougher sanctions over its nuclear and missile activities," South Korea's Yonhap News Agency quoted a Central Bank official as saying.

Steep declines in mining, manufacturing

Heightened international sanctions have targeted North Korea's mining sector, especially the coal industry. Restrictions on oil and gas imports have hit manufacturing.

Led by a sharp decline in coal production, mining production decreased 11 percent in 2017 compared to growth of 8.4 percent in 2016.

Manufacturing, which grew by 4.8 percent in 2016, dropped by 6.9 percent last year due to a decline in heavy and chemical industry production.

Agriculture and fishing, which account for about a fifth of the economy, fell 1.3 percent in 2017. Construction fell 4.4 percent while electricity and gas also fell 2.9 percent.

Mining and manufacturing combined accounted for about one-third of North Korea's economy.

Sanctions hit exports

In a further sign sanctions are biting, North Korea's exports plummeted to $1.77 billion (€1.52 billion) a decrease of 37 percent compared to a year earlier.  Imports dropped 1.8 percent to $3.8 billion.

Under pressure from the United States, North Korea's largest trading partner, China, last year began to strictly enforce international sanctions.

Since South Korea shut down the Kaesong Industrial Zone in North Korea in 2016, trade between the two countries has been almost non-existent. 

Read more: South Korea explores business opportunities in the North

As part of a diplomatic effort that led to a summit in Singapore between President Donald Trump and North Korean leader Kim Jong Un in June, the United States has held out the prospect of lifting sanctions and boosting North Korea's economy if it fully dismantles its nuclear and missile programs.

South Korea's Central Bank has estimated economic growth in North Korea since 1991. North Korea does not published economic data.

North Korea's Gross National Income per capita stands at $1,283, or only 4.4 percent of that in South Korea, the Central Bank said.

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