North Korea’s economy contracted the most in 23 years amid sanctions and COVID-19

North Korea’s economy contracted the most in 23 years amid sanctions and COVID-19

North Korea’s economy contracted the most in 23 years amid sanctions and COVID-19

© Reuters. FILE PHOTO: A vendor appears at a store in a newly built residential complex after its opening ceremony on Ryomyong Street in Pyongyang, North Korea, on April 13, 2017. REUTERS / Damir Sagolj

By Joori Roh

SEOUL (Reuters) – North Korea’s economy suffered its biggest contraction in 23 years in 2020 due to continued UN sanctions, COVID-19 lockdown measures and bad weather, Korea’s central bank said on Friday. from the south.

Gross domestic product (GDP) in the isolated economy contracted 4.5% last year in real terms, the Bank of Korea (BOK) said on Friday, the worst since 1997 and reversing a 0.4% growth in 2019, the first expansion in three years.

“Along with continued and intense UN sanctions, North Korea’s blockade measures to combat the coronavirus pandemic … and worsening weather conditions such as heavy rains and typhoons were the main drivers of the contraction,” a BOK official told reporters.

“North Korea’s COVID-19 measures included border blockades, a 30-day quarantine for those showing symptoms (COVID-19), a domestic travel ban and an entry restriction to Pyongyang,” the official said, adding that These movements greatly impacted the country. manufacturing industry and service sector.

Estimates of North Korea’s economic data by the BOK are considered the most reliable as the isolated nation does not release any statistics on its economy.

While North Korea has not officially confirmed any virus cases, its leader Kim Jong Un late last month said that the failure to implement measures to combat the coronavirus had led to a “major crisis.”

In June, Kim said the country was struggling with a “tense” food situation, citing last year’s pandemic and typhoons.

A South Korean government source with close knowledge of the matter told Reuters this week that North Korea is facing its worst economic crisis since a famine in the 1990s killed as many as 3 million.

But the source said few deaths from hunger have been reported in the latest crisis, thanks to Chinese aid and the release of military and emergency reserves.

North Korea closed borders and halted trade with China, its biggest economic lifeline, after the pandemic broke out.

The source said the two countries are expected to resume trade from August via freight train services after scrapping plans to do so in April mainly due to concerns about more contagious variants of the coronavirus.

The breakdown of data on Friday showed that industrial production, which accounts for 28% of the North Korean economy, declined by 5.9%, while agricultural, forestry and fish production fell by 7.6%.

The service sector, which represents a third of the economy, also contracted 4.0%.

The BOK has been publishing its estimates since 1991, based on information from various sources, including the intelligence and foreign trade agencies of the South and data from the Ministry of Unification.

Meanwhile, North Korea’s international trade volume plummeted 73.4% to $ 0.86 billion last year, as exports of unsanctioned items, such as watches and wigs, were estimated to have declined by 86 , 3% and 92.7%, respectively, with the COVID-19 closure measures.

“The trade volume that accounted for about 21.9% of GDP in 2016 … dropped dramatically to 2.9% in 2020 after the impact of the COVID-19 lockdown added to economic sanctions,” said the BOK official.