North Korea economy grew 1 pct in 2014, says South Korea’s central bank

By: | Published: July 17, 2015 8:55 AM

North Korea's economy expanded by 1.0 percent in 2014, the South Korean central bank said on Friday, with a drought expected to hobble growth in one of the world's most isolated countries this year.

North Korea’s economy expanded by 1.0 percent in 2014, the South Korean central bank said on Friday, with a drought expected to hobble growth in one of the world’s most isolated countries this year.

After suffering a contraction in 2010, North Korea’s economy grew, albeit at relatively low levels for four straight years. In 2013, GDP grew by 1.1 percent.

The slightly faster expansion last year was marked by growth in services and signs of rising private consumption, the Bank of Korea said in an annual report.

A drought could dent economic activity this year, as North Korea has said it is the worst it has seen in 100 years although Seoul has said it seems to be easing.

Impoverished North Korea does not release economic data and South Korea’s central bank is the only government entity that provides official estimates of the North’s economic performance.

The statistics do not include black market economic activity that has grown steadily in recent years, creating a consuming class with demand for products such as cosmetics, smartphones, fruit juices and foreign clothes, according to residents and visitors.

The increase in economic activity last year was attributed mainly to growth in services and building while farming, mining and manufacturing saw slower growth, the central bank said.

The Bank of Korea put North Korea’s gross national income (GNI) at 34.2 trillion won ($29.85 billion). On a per capita basis, South Korea is 21 times richer.

North Korea, a country of 24.7 million people, is one of the most isolated countries in the world.

It is heavily sanctioned under UN resolutions for its nuclear and missile tests dating back to 2006. Ties with South Korea were cut back sharply after Seoul suspended most commercial projects and aid in 2010.

Services rose 1.3 percent in 2014 on-year, up from 0.3 percent in 2013, the Bank of Korea said. The service industry made up 31.3 percent of the North Korean economy last year, up slightly from 30.0 percent in 2013.

All sub-indices under services saw gains, including retail sales, food and accommodation as well as logistics and communications, according to the Bank of Korea.

Construction was up 1.4 percent, rebounding from a 1.0 percent decline in 2013, with an increase in buildings offsetting declines in road and plant construction.

A central bank official said construction activity was focused on satellite cities surrounding Pyongyang last year, including in North Hamgyong Province.

The same data showed total North Korea trade at $7.6 billion, up 3.7 percent from 2013. Exports fell 1.7 percent on-year while imports jumped 7.8 percent on increased demand for machinery and textiles. More than 90 percent of North Korea’s trade is with neighbouring China. ($1 = 1,145.8000 won)

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