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The economy of N.Korea has shrunk the most in 23 years due to COVID-19 and sanctions – S.Korea c.bank

A seller is pictured in a shop in a newly built apartment building after its opening ceremony on Ryomyong Street in Pyongyang, North Korea April 13, 2017. REUTERS / Damir Sagolj

SEOUL, Jul 30 (Reuters) – North Korea’s economy suffered its biggest decline in 23 years in 2020 as it suffered from ongoing UN sanctions, COVID-19 lockdown measures and bad weather, the South Korean central bank said on Friday.

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

“In addition to the continuing intense UN sanctions, North Korea’s lockdown measures to combat the coronavirus pandemic … and worsening weather conditions such as heavy rains and typhoons were the main reasons for the contraction,” a BOK official told reporters.

“The COVID-19 measures in North Korea included border blockades, a 30-day quarantine for those who showed (COVID-19) symptoms, a ban on domestic travel and a restriction on entry into Pyongyang,” the official said, adding, that these moves the manufacturing and service sectors.

The BOK’s estimates of North Korean economic data are considered to be the most reliable, as the isolated country does not publish statistics on its economy.

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

In June, Kim said the country was grappling with “tight” food security, citing last year’s pandemic and typhoons.

A South Korean government source well aware of the matter told Reuters this week that North Korea is facing the worst economic crisis since a famine in the 1990s that killed up to 3 million people. Continue reading

However, the source said that few deaths from starvation were reported in the recent crisis, thanks to Chinese aid and the release of military and emergency reserves.

North Korea closed its borders and stopped trading with China, its main economic lifeline, following the outbreak of the pandemic.

The source said the two countries are expected to resume trading via freight train services as early as August after plans to do so were abandoned in April amid concerns about more contagious variants of the coronavirus.

Friday’s data breakdown showed that industrial production, which accounts for 28% of the North Korean economy, fell 5.9% while agricultural, forestry and fishing output fell 7.6%.

The service sector, which makes up a third of the economy, also shrank by 4.0%.

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

Meanwhile, North Korea’s international trade volume fell 73.4% to $ 0.86 billion last year as exports of unsanctioned items like watches and wigs fell by an estimated 86.3% and 92, respectively, due to COVID-19 lockdown measures .7% have decreased.

“The volume of trade, which accounted for around 21.9% of GDP in 2016, was sharply reduced to 2.9% in 2020 after the effects of the COVID-19 lockdown contributed to economic sanctions,” the BOK official said.

Reporting by Joori Roh; Editing by Raju Gopalakrishnan

Our Standards: The Thomson Reuters Trust Principles.

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