Posted January. 09, 2012 22:23,
North Korea`s economic prowess has deteriorated due to stalled inter-Korean relations since peaking in 2007 due to expanded aid from South Korea and trade with China, a report released Monday in Seoul said.
The North`s economic ability peaked to 104.7 in 2007, up from the benchmark score of 100 in 1995, but plunged afterward to as low as 86.5 in 2009, the Sejong Institute said in the report prepared at the request of Statistics Korea. The Stalinist country`s economic prowess was based on 10 indicators including steel and electricity production, trade volume, state budget and the value of the Souths assistance to the North.
The North Korean economy began to deteriorate from the mid-1990s, when millions of people starved to death due to famine, and the economic ability figure fell to as low as 70.3 in 1998. It rose again, however, and reached 104.7 in 2007.
South Korean assistance to the North surged to raise the indicator to a high of 236.9 in 2007, a huge leap from the baseline score of 100 in 1995. The communist country`s trade volume also jumped 43.4 percent due to the expansion of trade with China.
The North`s economy began to shrink from 2008, when the South halted aid. Notably, the indicator fell to as low as 86.5 in 2009 to tie the record-low set in 2000. Due to deterioration of inter-Korean relations, the volume of South Korean government assistance to the North tumbled over the period to 36.2 in 2009, down 84.7 percent from that in 2007.
A decline in external trade except with China due to tougher international sanctions against Pyongyang also hastened the deterioration of the North Korean economy. Due to the participation by Singapore, one of the North`s top five trading partners, in the sanctions, the combined volume of the North`s trade fell about 10.7 percent, resulting in the indicator falling from 186.3 in 2008 to 166.3 in 2009.
The think tank said,Considering that production of steel and electricity, the cornerstone of the centrally planned North Korean economy, remained largely unchanged, the recent deterioration of the North Korean economy stems from reduction of South Korean aid and contraction of the North`s overall trade volume.