Affected by COVID-19 and sanctions, North Korea’s economy has shrunk the most in 23 years

© Reuters. File photo: After the opening ceremony on Ryomyong Street in Pyongyang, North Korea, on April 13, 2017, a supplier took a photo in a shop in a newly built residential area. REUTERS/Damir Sagolj

By Joori Roh

SEOUL (Reuters)-The Bank of Korea said on Friday that the North Korean economy suffered its biggest contraction in 23 years in 2020 due to continued UN sanctions, COVID-19 blockade measures and severe weather.

The Bank of Korea (BOK) said on Friday that the gross domestic product (GDP) of isolated economies actually contracted 4.5% last year, the worst level since 1997, and reversed 0.4% growth in 2019, which is three years The first expansion.

“As the United Nations continues to severe sanctions, the lockdown measures taken by North Korea to fight the coronavirus pandemic… and the deterioration of weather conditions such as heavy rain and typhoons are the main factors leading to the economic contraction,” a South Korean central bank official told reporters.

The official said: “North Korea’s COVID-19 measures include border closures, 30-day quarantine for those with (COVID-19) symptoms, bans on domestic travel, and restrictions on entry into Pyongyang.” Manufacturing and service industries.

The Bank of Korea’s estimate of North Korea’s economic data is considered the most reliable because this isolated country has not disclosed any statistics about its economy.

Although North Korea has not officially confirmed any cases of the virus, its leader Kim Jong Un said at the end of last month that failure to take measures to deal with the coronavirus has caused a “great crisis.”

In June of this year, Kim cited the pandemic and last year’s typhoon as saying that the country is struggling to cope with the “tension” food situation.

A South Korean government source familiar with the matter told Reuters this week that North Korea is facing its worst economic crisis since the famine in the 1990s, killing as many as 3 million people.

However, sources said that due to China’s aid and the release of military and emergency reserves, there have been few reports of deaths due to hunger in the recent crisis.

After the outbreak of the pandemic, North Korea closed its borders and stopped trading with China, China’s largest economic lifeline.

According to sources, the two countries are expected to resume trade through freight train services as early as August after the cancellation of the plan in April, mainly due to fears that the coronavirus will become more contagious.

A breakdown of data on Friday showed that industrial output, which accounts for 28% of North Korea’s economy, fell by 5.9%, while agricultural, forestry and fishery output fell by 7.6%.

The service industry, which accounts for one-third of the total economy, also shrank by 4.0%.

The Bank of Korea has been publishing its estimates based on information from various sources (including data from the Korean Intelligence and Foreign Trade Agency and the Ministry of Unification) since 1991.

At the same time, North Korea’s international trade volume plummeted by 73.4% last year to US$860 million, as exports of non-sanctioned items such as watches and wigs are estimated to have fallen by 86.3% and 92.7%, respectively, under the influence of the COVID-19 blockade.

“Trade volume accounted for approximately 21.9% of GDP in 2016… after the impact of the COVID-19 blockade increased economic sanctions, it dropped sharply to 2.9% in 2020,” said an official from the Bank of Korea.

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