Markets Influence North Korea Growth

North Korea’s market economy accounted for 28.5% of its consumption and investments, an economist at South Korea’s central bank said Sunday, a sign that underscores the growing influence of the market economy in the communist country.

Choi Ji-young, an economist at the Bank of Korea, made the estimate in a report by analyzing several data points on the North’s economy, including a 2013 UN estimate on North Korea’s gross domestic product, Yonhap reported.

North Korea’s decades-old food rationing system collapsed after a massive famine swept through the country in the mid-1990s. The development has led to the creation of informal markets in the North.

North Korea’s market economy is gradually on the rise and private moneylenders have reportedly started to provide funds to the construction sector, including for apartments.

“Informal economic activities are gradually expanding in terms of investment spending in North Korea,” Choi said in the report, adding that effects that increase production are also on the rise, as some household savings are being used for investment spending.

In March, the UN Security Council slapped tougher sanctions on Pyongyang for its fourth nuclear test in January and long-range rocket launch in the following month.

In early May, North Korea’s young leader Kim Jong-un unveiled the nation’s first five-year economic plan in decades, calling for the country to modernize to kick-start its moribund state-dominated economy.

The BoK said the North Korean economy grew 1% on-year in 2014, slowing from the previous year’s 1.1% gain, hit by the low output of corn and potatoes.