글로벌
North Korea's Recent Economic Trend and Outlook for 2010
2010-08-17YOON,Byung-Soo
목차
요약
North Korea's Recent Economic Trend and Outlook for 2010
Ⅰ. Issues
With a decrease in crop production and unfavorable power conditions, North Korea's
economy has slowed down. Growth rates of agriculture, fishery, heavy industry, light
industry and other industries have dropped and exports have also fallen. The 2009 growth rate has been shifted into negative.
Accordingly, based on the recent analysis of economic trends of North Korea and impacts of suspension of inter-Korean relations and strengthened international sanctions on North Korea, 2010 outlook for North Korea's key businesses and economy and its implications were presented.
Ⅱ. North Korea's Current Economic Status and Features
1. North Korea's economic performance in 2009
North Korea's economic growth rate has decreased 0.9% year-on-year, thus shifting into a negative growth.
Amid unfavorable food conditions resulting from a decrease in crop production, as internal and external economic conditions including strengthened international sanctions on North Korea, suspension of international support and control on internal market activities of North Korea have been worse, its growth rate has dropped.
The agriculture and fishery industry has decreased 1.0% year-on-year due to a slowdown in crop production caused by cold weather and drought. The mining and manufacturing industry has began to decline. The construction industry has slightly increased year-on-year, but power conditions have been worse than last year.
2. Budge execution performance in 2009 and plan for 2010
While budge revenue increased 1.7% in 2009, 99.8 was executed, posting a budge surplus for consecutive two years. Approximately $3.59 billion was executed with focus on the development of the metal industry and science technology.
2010 budget has rose 8.3% up to $3.89 billion, especially for the improvement of citizens' life. Profits of state-run companies (profits to be returned to the government by state-run companies) account for the biggest portion of budget revenue.
Ⅲ. North Korea's Export Trend and Features
1. Key features of North Korea's export in 2009
North Korea's international trade volume (excluding inter-Korean trade) decreased 10.5% year-on-year. In particular, export dropped 6.0% and import fell 12.5%, leading to a 17.2% decrease year-on-year in balance of trade totaled $1,2880 million.
Its trade volume toward China dropped 3.8% year-on-year. In particular, import
decreased 7.2%, contributing to improving trade deficit toward China. However, since
its trade toward China reached 78.5% of the total trade volume, its trade dependence
on China has been bigger and bigger.
While its trade volume toward Russia had decreased for consecutive four years, both
its export and import with Germany had significantly increased, making Germany emerge as North Korea's second largest trading partner.
2. Trade trends and features by item
While export of animal products, botanical products and textiles toward China has risen, export of mineral fuels, its No.1 export item, has fallen 4.5%. Export of machinery/electrical and electricity products and jewelry has significantly decreased -31.2% and -29.4% respectively and therefore its concentration on primary manufacture products has continued.
Since import prices of mineral products significantly dropped -44%, this has had a big impact on the total import volume. However, the biggest impact was caused by a price drop (-41%) in crude oil which accounts for 73% of North Korea's import, and crude oil import slightly decreased by 1.7%.
Meanwhile, amid a significant increase in vehicle imports, as North Korea's consignment processing trade toward China has increased, textile products have been emerged as its No.1 import item and import of strategic products such as food and fertilizer have sharply increased 59% and 83% respectively.
Ⅳ. Inter-Korean Trade Trends and Features
Inter-Korean trade volume decreased 7.8% year-on-year to $1.68 billion in 2009, recording a minus growth rate for the first time since 2004. In particular, general trade,
Mt.Kumgang tour business and non-commercial trade have significantly decreased.
However, its trade toward South Korea accounts for 33%, making South Korea its second largest trading partner following China (52.7%), the largest export partner (47% of the total export) and the largest trade surplus market.
By type of export, non-commercial trade has sharply decreased and its proportion of
inter-Korean trade has decreased. However, trade in Gaesung Industrial Complex and consignment procession trade have increased, accounting for 80.4% of inter-Korean trade.
While import toward North Korea slightly increased 0.2% year-on-year, export decreased 16.1%. By item, import and export of textile products accounted for the largest portion and growth rate of electrical and electricity products was the highest.
North Korea's hard currency import through inter-Korean trade, which include wage of
North Koreans, tourism revenue and social insurance premium, recorded surplus. Its hard currency import volume was approximately $380 million, 22.6% down from the previous year.
Ⅴ. 2010 North Korea's Economic Outlook and Implications
1. North Korea's economic direction for 2010
North Korea puts priority on the light industry and an agriculture production increase
to improve the life of citizens in 2010 and focuses on four key leading sectors (steel,
power, coal and rail road) and science technology.
In particular, North Korea emphasizes modernization and sophistication of industrial facilities and strengthening defense by developing science technology and actively attracts foreign capital through expansion of foreign economic partnership, especially China-North Korea economic ties.
2. North Korea's economic outlook for 2010 and its implications
Food conditions are not expected to improve due to unfavorable weather conditions.
Since a decrease in hard currency import resulting from suspension of inter-Korean relations and stronger sanctions on North Korea have had a negative impact on food import, food shortage is expected to reach 500,000~700,000 ton.
Power conditions will remain unfavorable in 2010 due to difficulties in increasing coal
production and crude oil import. As raw materials are to be supplied less 솜n expected due to lack of investment revenue, development of the light industry will be significantly limited.
Although food import from China sharply increases in 2H, 2010 and North Korea's trade dependence on China becomes bigger, its annual trade volume toward China will decrease due to lack of its capacity of payment and settlement of foreign currency transactions resulting from a decrease in inter-Korean trade and stronger sanctions on North Korea.
In particular, as inter-Korean trade sharply drops in 1H, 2010 due to impacts of the Cheonan incident, North Korea's hard currency import through inter-Korean trade will decrease $165 million to $214 million.
As a result, unless North Korea has a forward looking attitude by presenting advanced
measures on denuclearization, its economy will shrink further and wreak havoc on the
light industry, agriculture, science technology and four key leading sectors for which its fiscal year 2010 expenditure plan has significantly increased, which will push North Korea to a deeper 'poverty trap.'
Ⅰ. Issues
With a decrease in crop production and unfavorable power conditions, North Korea's
economy has slowed down. Growth rates of agriculture, fishery, heavy industry, light
industry and other industries have dropped and exports have also fallen. The 2009 growth rate has been shifted into negative.
Accordingly, based on the recent analysis of economic trends of North Korea and impacts of suspension of inter-Korean relations and strengthened international sanctions on North Korea, 2010 outlook for North Korea's key businesses and economy and its implications were presented.
Ⅱ. North Korea's Current Economic Status and Features
1. North Korea's economic performance in 2009
North Korea's economic growth rate has decreased 0.9% year-on-year, thus shifting into a negative growth.
Amid unfavorable food conditions resulting from a decrease in crop production, as internal and external economic conditions including strengthened international sanctions on North Korea, suspension of international support and control on internal market activities of North Korea have been worse, its growth rate has dropped.
The agriculture and fishery industry has decreased 1.0% year-on-year due to a slowdown in crop production caused by cold weather and drought. The mining and manufacturing industry has began to decline. The construction industry has slightly increased year-on-year, but power conditions have been worse than last year.
2. Budge execution performance in 2009 and plan for 2010
While budge revenue increased 1.7% in 2009, 99.8 was executed, posting a budge surplus for consecutive two years. Approximately $3.59 billion was executed with focus on the development of the metal industry and science technology.
2010 budget has rose 8.3% up to $3.89 billion, especially for the improvement of citizens' life. Profits of state-run companies (profits to be returned to the government by state-run companies) account for the biggest portion of budget revenue.
Ⅲ. North Korea's Export Trend and Features
1. Key features of North Korea's export in 2009
North Korea's international trade volume (excluding inter-Korean trade) decreased 10.5% year-on-year. In particular, export dropped 6.0% and import fell 12.5%, leading to a 17.2% decrease year-on-year in balance of trade totaled $1,2880 million.
Its trade volume toward China dropped 3.8% year-on-year. In particular, import
decreased 7.2%, contributing to improving trade deficit toward China. However, since
its trade toward China reached 78.5% of the total trade volume, its trade dependence
on China has been bigger and bigger.
While its trade volume toward Russia had decreased for consecutive four years, both
its export and import with Germany had significantly increased, making Germany emerge as North Korea's second largest trading partner.
2. Trade trends and features by item
While export of animal products, botanical products and textiles toward China has risen, export of mineral fuels, its No.1 export item, has fallen 4.5%. Export of machinery/electrical and electricity products and jewelry has significantly decreased -31.2% and -29.4% respectively and therefore its concentration on primary manufacture products has continued.
Since import prices of mineral products significantly dropped -44%, this has had a big impact on the total import volume. However, the biggest impact was caused by a price drop (-41%) in crude oil which accounts for 73% of North Korea's import, and crude oil import slightly decreased by 1.7%.
Meanwhile, amid a significant increase in vehicle imports, as North Korea's consignment processing trade toward China has increased, textile products have been emerged as its No.1 import item and import of strategic products such as food and fertilizer have sharply increased 59% and 83% respectively.
Ⅳ. Inter-Korean Trade Trends and Features
Inter-Korean trade volume decreased 7.8% year-on-year to $1.68 billion in 2009, recording a minus growth rate for the first time since 2004. In particular, general trade,
Mt.Kumgang tour business and non-commercial trade have significantly decreased.
However, its trade toward South Korea accounts for 33%, making South Korea its second largest trading partner following China (52.7%), the largest export partner (47% of the total export) and the largest trade surplus market.
By type of export, non-commercial trade has sharply decreased and its proportion of
inter-Korean trade has decreased. However, trade in Gaesung Industrial Complex and consignment procession trade have increased, accounting for 80.4% of inter-Korean trade.
While import toward North Korea slightly increased 0.2% year-on-year, export decreased 16.1%. By item, import and export of textile products accounted for the largest portion and growth rate of electrical and electricity products was the highest.
North Korea's hard currency import through inter-Korean trade, which include wage of
North Koreans, tourism revenue and social insurance premium, recorded surplus. Its hard currency import volume was approximately $380 million, 22.6% down from the previous year.
Ⅴ. 2010 North Korea's Economic Outlook and Implications
1. North Korea's economic direction for 2010
North Korea puts priority on the light industry and an agriculture production increase
to improve the life of citizens in 2010 and focuses on four key leading sectors (steel,
power, coal and rail road) and science technology.
In particular, North Korea emphasizes modernization and sophistication of industrial facilities and strengthening defense by developing science technology and actively attracts foreign capital through expansion of foreign economic partnership, especially China-North Korea economic ties.
2. North Korea's economic outlook for 2010 and its implications
Food conditions are not expected to improve due to unfavorable weather conditions.
Since a decrease in hard currency import resulting from suspension of inter-Korean relations and stronger sanctions on North Korea have had a negative impact on food import, food shortage is expected to reach 500,000~700,000 ton.
Power conditions will remain unfavorable in 2010 due to difficulties in increasing coal
production and crude oil import. As raw materials are to be supplied less 솜n expected due to lack of investment revenue, development of the light industry will be significantly limited.
Although food import from China sharply increases in 2H, 2010 and North Korea's trade dependence on China becomes bigger, its annual trade volume toward China will decrease due to lack of its capacity of payment and settlement of foreign currency transactions resulting from a decrease in inter-Korean trade and stronger sanctions on North Korea.
In particular, as inter-Korean trade sharply drops in 1H, 2010 due to impacts of the Cheonan incident, North Korea's hard currency import through inter-Korean trade will decrease $165 million to $214 million.
As a result, unless North Korea has a forward looking attitude by presenting advanced
measures on denuclearization, its economy will shrink further and wreak havoc on the
light industry, agriculture, science technology and four key leading sectors for which its fiscal year 2010 expenditure plan has significantly increased, which will push North Korea to a deeper 'poverty trap.'