North Korea economy grew 1% in 2014, says South Korea's central bank

[SEOUL] North Korea's economy expanded by 1.0 per cent in 2014, the South Korean central bank said on Friday, with a drought expected to hobble growth in one of the world's most isolated countries this year.

After suffering a contraction in 2010, North Korea's economy grew, albeit at relatively low levels for four straight years. In 2013, GDP grew by 1.1 per cent.

The slightly faster expansion last year was marked by growth in services and signs of rising private consumption, the Bank of Korea said in an annual report.

A drought could dent economic activity this year, as North Korea has said it is the worst it has seen in 100 years although Seoul has said it seems to be easing.

Impoverished North Korea does not release economic data and South Korea's central bank is the only government entity that provides official estimates of the North's economic performance.

The statistics do not include black market economic activity that has grown steadily in recent years, creating a consuming class with demand for products such as cosmetics, smartphones, fruit juices and foreign clothes, according to residents and visitors.

The increase in economic activity last year was attributed mainly to growth in services and building while farming, mining and manufacturing saw slower growth, the central bank said.

The Bank of Korea put North Korea's gross national income (GNI) at 34.2 trillion won (S$40.8 billion). On a per capita basis, South Korea is 21 times richer.

North Korea, a country of 24.7 million people, is one of the most isolated countries in the world.

It is heavily sanctioned under UN resolutions for its nuclear and missile tests dating back to 2006. Ties with South Korea were cut back sharply after Seoul suspended most commercial projects and aid in 2010.

Services rose 1.3 per cent in 2014 on-year, up from 0.3 per cent in 2013, the Bank of Korea said. The service industry made up 31.3 per cent of the North Korean economy last year, up slightly from 30.0 per cent in 2013.

All sub-indices under services saw gains, including retail sales, food and accommodation as well as logistics and communications, according to the Bank of Korea.

Construction was up 1.4 per cent, rebounding from a 1.0 per cent decline in 2013, with an increase in buildings offsetting declines in road and plant construction.

A central bank official said construction activity was focused on satellite cities surrounding Pyongyang last year, including in North Hamgyong Province.

The same data showed total North Korea trade at US$7.6 billion, up 3.7 per cent from 2013. Exports fell 1.7 per cent on-year while imports jumped 7.8 per cent on increased demand for machinery and textiles. More than 90 per cent of North Korea's trade is with neighbouring China.

REUTERS