North Korean Economy Expanded in 2014 Despite the Isolation

According to the Bank of Korea, North Korea’s economy underwent 1.0-percent growth in 2014. Analysts expect a drought to hamper economic progress for 2015. North Korea does not release economic reports to the world, and South Korea’s central bank is the only organization that monitors the Hermit Kingdom’s progress.

According to the Bank of Korea, North Korea’s economy underwent 1.0-percent growth in 2014. Analysts expect a drought to hamper economic progress for 2015. North Korea does not release economic reports to the world, and South Korea’s central bank is the only organization that monitors the Hermit Kingdom’s progress.

North Korea expanded more than usual in 2014, due to increases in private consumption and services. The service sector shot up 1.3 percent for 2014 year-on-year, an increase of 0.3 percent compared to 2013. The service sector makes up over 30 percent of the nation’s economy. Accommodation, food and retail saw gains as well. The central bank report does not include black market activity fueled by demand for such goods as smart phones, fruit juices and clothing.

Overall trade for 2014 came to $7.6 billion, which went up 3.7 percent compared to 2013, but black market trading comprises 30 percent of the nation’s trade. Black market trade includes weapons and drug sales, according to the U.S. Committee for Human Rights in North Korea, but the amount of income that North Korea makes from these illicit sales remains unknown. The isolated country also launders money through various enterprises around the world.

North Korea has suffered through UN-imposed sanctions over nuclear ambitions going back to 2006, but gauging the effect of the sanctions is nearly impossible because of so little data available, especially since South Korea stopped aid and various commercial projects in 2010. Construction increased 1.4 percent after recovering from a 1.0-percent decline in 2013, thanks to the new construction of buildings to counter-balance falls in plant and road projects.

Exports dropped, but imports surged by 7.8 percent because of heightening demand for textiles and machinery. China is major trading partner of North Korea, making up over 90 percent of all trade deals, and exports to China are over 97 percent. It is not clear how China’s current economic problems will affect North Korea going forward. What is known is that China’s efforts to curb pollution may have a crippling effect on North Korea’s economy. Coal and iron ore make up over 60 percent of exports to China, notes UPI. With that being said, North Koreans still have the mining sector to fall back on, which makes up 14 percent of the nation’s economy. The northern part of Korea is rich in other minerals, such as zinc, tungsten and iron. Despite falls in world commodity prices, North Korean mining has expanded in recent years.