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N. Korea May Have Its Missiles To Thank For Most Significant Economic Growth In Nearly Two Decades

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By Ryan Pickrell

North Korea’s economy experienced significant growth last year despite international sanctions, South Korea’s central bank revealed Friday.

North Korea’s gross domestic product soared 3.9 percent, the most substantial economic growth since 1999, the Bank of Korea introduced in a new report. North Korea does not publish economic data, so the data provided by the Bank of Korea, which pulls information from South Korea’s Ministry of Unification and National Intelligence Service, is used as a reliable substitute.

North Korea’s overall GDP in real terms for 2016 was approximately $28 billion, with mining and manufacturing accounting for more than 33 percent of the country’s economy. Exports and imports expanded 4.6 percent and 4.8 percent respectively.

The North’s growth may also be attributable to its active nuclear and missile programs, as the North Korean government has spent heavily on the manufacturing of key components for these weapons development programs, according to Shin Seung-cheol, an official at the Bank of Korea.

North Korea has tested a batch of new missile systems, including short-, medium-, intermediate-, and long-range ballistic missiles, as well as surface-to-air and coastal defense cruise missiles. The intercontinental ballistic missile tested earlier this month is believed to be able to strike targets in the continental U.S.

Furthermore, the North has also been engaging in unofficial free market activities, although it is unclear how much of an effect this has on the overall economy.

The growth is certainly surprising given that North Korea has been under international sanctions since 2006 for its continued pursuit of nuclear weapons with greater and greater explosive yields and ballistic missiles with longer and longer ranges to deliver them to distant targets far from North Korea’s shores.

“Sanctions were not very effective last year as there was a big loophole in [them],” a senior official at the Korea Trade-Investment Promotion Agency told CNNMoney. “North Korea was still allowed to export coal on the condition that it is intended for the people’s well being.”

“Coal doesn’t come with a tag stating whether it is for the livelihood of its people or for missiles,” the South Korean official added.

Trade with China accounts for around 90 percent of all North Korean trade, with China purchasing significant amounts of North Korean coal. But, while China supported the reclusive regime in the past, the North may experience an economic downturn this year, as Beijing has, to a certain extent, increased pressure on Pyongyang.

China suspended all coal imports from North Korea earlier this year, and Chinese imports of North Korean coal dropped 75 percent in the first half of this year. In this sense, China actually went above and beyond the requirements set forth by U.N. Security Council resolutions. North Korea may also be facing one of the worst droughts in over a decade, limiting food production for a society that is already extremely malnourished.

“North Korea can bypass some sanctions but coal is critical for their economy and it is something that’s difficult to smuggle. Coal can be spotted easily when it’s being moved,” Kim Suk-jin, a research fellow at the state-run Korea Institute of National Unification, told Reuters.

“We may see a significant drop in North Korea’s trade this year,” the South Korean official explained. North Korea’s economy is too fragile to continue growing at this pace, and despite robust growth last year, the North remains one of the poorest countries in the world with a GDP per capita roughly 5 percent of its southern neighbors.

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