N. Korea's economy contracts 3.5% in 2017 due to sanctions: S. Korean bank

By Lim Chang-won Posted : July 20, 2018, 14:26 Updated : July 20, 2018, 14:26

[KCNA / Yonhap]


SEOUL -- North Korea's economy contracted 3.5 percent last year after an expansion of 3.9 percent a year ago as China joined the international community to impose sanctions against its impoverished communist ally, according to data published by the South's Bank of Korea (BOK) on Friday.

It was the worst performance since 1997 when North Korea's moribund economy shrank 6.5 percent. The central bank predicted a continued recession in the North's economy this year as Chinese sanctions were still in effect despite a peace offensive by leader Kim Jong-un.

BOK data showed the North had posted steady GDP growth for three years since the young leader took power in late 2011 following the sudden death of his father who achieved a GDP expansion of 0.2 percent on average during his 17-year rule.

The North's economy contracted 1.1 percent in 2015 but rebounded in 2016 for an expansion of 3.9 percent, the fastest pace in 17 years, fueled in part by Chinese aid and trade, as well as the reallocation of conventional defense spending.

In 2017, BOK data showed that North Korea suffered a 10.4 percent setback in heavy and chemical industries and an 11 percent drop in mining output due to sanctions and an international ban on exports of mineral resources. Output in the agricultural and fishery sector was down 1.3 percent while the manufacturing sector posted a 6.9 percent drop.

The North's trade volume stood at $5.55 billion last year, down 15 percent from a year earlier. Exports fell 37.2 percent to $1.77 billion, while imports were up 1.8 percent to $3.78 billion.

According to the South's state-funded Korea Trade and Investment Promotion Agency (KOTRA), China remained North Korea's economic lifeline last year, accounting for 95 percent of its total trade volume with $5.26 billion, followed by Russia with $77.8 million and India with $55.1 million.

In return for its commitment to denuclearization, North Korea urged the international community to ease sanctions, but the United States and its allies were cautious.
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