North Korea’s economy recorded its biggest decline in 2020 since the deadly famine in the 1990s, due to the coronavirus, natural disasters and international sanctions that crushed the already difficult state of Kim Jong Un.
Gross domestic product shrank 4.5 percent in 2020, the biggest drop since 1997According to estimates by the South Korean Central Bank, which for years has provided the best available accounting of economic activity in the confined state.
The report shows that North Korea’s economy shrank last year to its smallest size since Kim took office in late 2011. GDP fell to 31.4 trillion won ($27.4 billion), compared to 33.8 trillion won in Kim’s first year in office, According to data from the South Korean central bank released on Friday.
Kim’s decision to close the border more than a year ago due to the pandemic caused trade to collapse, slowing the flow with his main benefactor, China. North Korea’s exports fell 67.9% last year to just $90 million, while imports fell 73.9%, according to the Bank of Korea report.
Kim, who is committed to improving living conditions in the country, with one of the lowest per capita GDP levels in the world, has told his people and his ruling party that his country is suffering. He has issued rare warnings about economic hardship and food shortages, but so far he has not shown any indication that he is ready to resume talks on reducing his nuclear arsenal. In exchange for economic incentives from other countries, including the United States.
However, Kim and South Korean President Moon Jae-in agreed this week to improve cold relations and re-establish hotlines that had been cut for more than a year by political grudges, improving slim prospects for a breakthrough in the country’s long stalemate. Nuclear talks.
By publicizing his problems, Kim may send a signal to the Biden administration to allow more help through international organizations such as the United Nations World Food Program. However, foreign aid organizations have struggled to enter North Korea to provide humanitarian assistance, and the World Food Program said in late 2020 that it was critical for the country to ease restrictions on entry for international staff.
Facing global sanctions to punish them for its nuclear weapons program, North Korea has largely turned to cybercrime to fill its depleted coffers. In 2019, it got in about $2 billion by stealing resources from the financial sector around the world, according to testimony before a US House of Representatives committee last June.
The economic downturn in 2020 is the worst in North Korea since 1997, when a series of droughts, floods and failed economic policies led to a famine that estimated the lives of between 240,000 and 3.5 million people. Although the chances of a similar event recurring are much lower due to the proliferation of informal markets across the country under the tacit approval of the government, And Kim warned last month that “the nutritional situation is getting more and more tense.”
Nor is the economy likely to recover this year. Fitch Solutions said in April that North Korea’s economy will barely grow in 2021 as the borders remain closed.
For years, North Korea has blamed the United States for its economic problems, and justified allocating a huge share of government spending to its military as necessary to prevent an American invasion. Economic hardship has not prevented Kim’s nuclear arsenal from growing, as Pyongyang produces enough fissile material for about six nuclear bombs a year..
(c) 2021, Bloomberg