World Economy

UN Sanctions Could Drive North Korea Economy Down 5%

The UNSC votes to impose new sanctions on N. Korea on Saturday.The UNSC votes to impose new sanctions on N. Korea on Saturday.

North Korea is in for a plunge in economic activity, following new economic sanctions by the United Nations, on top of tumbling trade with China and the worst drought since 2001.

Despite its rapid progress in ballistic missile capabilities, much of the North Korean economy remains undeveloped and mired in poverty, with few sources of economic growth other than mining and agriculture, Nikkei reported.

The new economic sanctions, introduced Saturday by the UN Security Council, have eliminated the sources of what growth is left in the economy—coal, iron ore and other minerals exports.

North Korea’s economy is likely to shrink around 5% in 2017, according to Rajiv Biswas, Asia-Pacific chief economist for IHS Markit. Such a contraction would be by far the worst in recent years. North Korea’s economy recorded negative growth in five of the last 11 years, but the scale of contraction was usually around 1%, according to data from the Bank of Korea.

The North Korean economy shrank 4.4% in 1995, when the country was hit by one of the worst famines in its history, which left more than two million people dead.

The new sanctions came as the UN Food and Agriculture Organization warned July 20 of the worst drought since 2001 and of a severe food shortage over the next few months in North Korea.

According to the FAO, early season crop production is down 30% compared to last year.

A brewing economic crisis follows a rare expansion of 3.9% in 2016, the fastest in 17 years, on the back of surging coal exports to China.

North Korea depends on China for some 90% of its trade, following a sharp reduction in trade with neighboring South Korea.

 A Violent Violation

North Korea has come out fighting following fresh UN Security Council sanctions on Pyongyang and after the US and South Korea celebrated the punishing measures.

The North on Monday condemned the sanctions imposed in response to its weapons programs, saying it would not negotiate over nuclear arms while threatened by the United States.

The sanctions passed at the weekend were a “violent violation of our sovereignty”, Pyongyang said in a statement carried by its official Korean Central News Agency, adding it would take “righteous action” in return.

“We will not put our self-defensive nuclear deterrent on the negotiating table” while it faced threats from Washington, it said, “and will never take a single step back from strengthening our nuclear might”.



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