LONDON - North Korea’s economic trajectory has u-turned from surprisingly strong growth in 2016 to a sharp contraction last year -- and worse is yet to come.
Estimates from South Korea’s central bank show gross domestic product in the North contracted 3.5 percent in the 12 months through December, the biggest drop in two decades. The Seoul-based Bank of Korea, which is considered the most authoritative source for economic data on its neighbor, said tighter sanctions imposed in 2017 will only show their full impact this year.
The poor state of the economy should give U.S. President Donald Trump greater leverage in his efforts to persuade North Korean leader Kim Jong Un to abandon his nuclear weapons program, though the regime in Pyongyang has shown its willingness to put itself above the well-being of its people.
Per capita income in the North was estimated at 1.46 million won ($1,285) in 2017, or about 4.4 percent that of South, the BOK said on Friday. The central bank uses a wide variety of information to compile its figures and draws on multiple government departments and agencies in the South, as well as the nation’s intelligence services.
"The intensity of the sanctions was relatively weak in 2016 but things got very tough in 2017, when the ban on exports also included North Korea’s key products such as coal, iron ore, seafood and textiles, which resulted in a sharp drop in trade volumes," Shin Seung-cheol, head of the BOK’s national accounts coordination team, said at a briefing in Seoul.