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Economy

North Korean economy shrinks 4.5%, worst slump under Kim Jong Un

Pandemic, sanctions and severe flooding inflict a triple blow

A North Korean soldier patrols the border with China in April. The regime closed the border in January 2020, a move that sharply curtailed trade.   © Kyodo

SEOUL -- North Korea's economy contracted by 4.5% last year, according to an estimate released on Friday by South Korea's central bank, marking the biggest downturn under Kim Jong Un's regime as the country faced sanctions, severe weather and fallout from the coronavirus pandemic.

The slump is the second worst since the Bank of Korea began releasing such figures in 1991. Real gross domestic product shrank by 6.5% in 1997 during the height of the North Korean famine.

For 2020, the largest contributor to the economic slide was the mining industry, which contracted 9.6%. China-bound anthracite coal is one of Pyongyang's biggest exports. But sanctions imposed by the United Nations Security Council in 2017 banned all exports.

Another blow to North Korea's resources industry came in the latter half of last year when typhoon-related floods caused damage to a key mining region.

North Korea's farming, forestry and fishing industry contracted 7.6% because of floods and the coronavirus impact. Heavy rain caused wide damage to crops, and limits were placed on fishing excursions as part of the regime's strict disease prevention measures.

The service industry retreated an estimated 4%. North Korea's border with China was shut in January 2020, which stalled the inflow of Chinese consumer goods as well as everyday human traffic.

North Korean foreign trade plunged 73.4% last year to $863 billion, according to the Korea Trade-Investment Promotion Agency.

The disparities between the Koreas have widened. North Korea's gross national income stood at 35 trillion won ($30.5 billion), or 56 times smaller than South Korea's. That translates to a per-capita figure of 1.37 million won in the North, 27 times smaller than in the South.

Pyongyang does not publicize economic indicators through its own channels. The Bank of Korea publishes estimates based on data gleaned from relevant institutions.

But North Korea does claim that its GDP was $33.5 billion in 2019, in a report on sustainability development goals the regime submitted recently to the United Nations. GDP grew by an average of 5.1% between 2015 and 2019 while the per-capita figure rose by an average of 4.6%, according to the communist state.

North Korea's sustainability report acknowledges severe shortages in food supply, electricity and medical supplies. Cereal production in 2018 hit a 10-year low of 4.95 million tons due to natural disasters and the lack of agricultural supplies.

Cereal production rebounded to 6.65 million tons in 2019, according to North Korea's report. The output declined once again to 5.52 million tons last year due to the severe weather and flooding.

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