North Korean Economy Watch

According to the Daily NK:

One out of every ten new babies born in North Korea is born premature, according to new World Health Organization (WHO) data.

According to the WHO-produced ‘Born too Soon: The Global Action Report on Preterm Birth’, which was released by the UN body on the 2nd, among 347,600 babies born in North Korea in 2010, fully 37,300 were preterm, or roughly 10.7%. North Korea ranked 80th out of 184 countries surveyed on this measure.

Complications linked to preterm birth caused the death of 2,700 babies, 7% (2,700) of the total, placing North Korea 55th in the world.

You can download the full UN report here.

Read the full story here:
1 in 10 North Korean Babies Born Premature
Daily NK
Hwang Chang Hyun
2012-05-04

According to Yonhap:

First quarter bilateral trade between North Korea and China reached an all-time high of US$1.37 billion, Voice of America reported Tuesday, citing data from China’s Ministry of Commerce.

The volume for the January-March period marked a surge of 40 percent from a year ago, when a record $972 million was reported in the two-way trade.

North Korea’s first-quarter exports to China rose 40 percent to $568 million, while its imports of Chinese goods also increased at the same rate to $800 million, according to the data.

As a result, Pyongyang’s quarterly trade deficit with China increased to $232 million, up from $170 million a year ago.

Read the full story here:
N. Korea-China trade hits record high in first quarter
Yonhap
2012-5-1

Marcus Noland writes for the East-West Centre:

With global attention focused on North Korea’s failed rocket launch today, it’s worth also taking a look at the other claim the Pyongyang regime has long made for the imminent April 15 birth centennial of its founding leader, Kim Il-sung: emergence into economic prosperity.

Originally, the regime had declared that the country would emerge as “a strong and prosperous nation” during this time, but with that aspiration far from attainment, the goal has been relaxed recently to marking the country’s “passage through the gate” to prosperity. In reality, the North Korean economy today is characterized by macroeconomic instability, widening inequality and growing corruption.

No one (including the North Korean government) knows with any true confidence the size or growth rate of the country’s economy, but the consensus among outside observers is that per capita income today is lower than it was 20 years ago, and by some reckonings is only now re-attaining the level it first achieved in the 1970s.

Price data indicate that since a disastrous currency reform in November 2009, inflation, including for basic goods such as rice and coal, has been running at well over 100 percent a year. The black market value of the currency has been falling at a similar rate, meaning that those with access to foreign exchange are insulated from the ravages of inflation while those reliant on the local currency have seen their buying power dwindle. Unlike in the past, when grain prices fell after the harvest – sometimes by quite substantial amounts – prices have continued to rise this year. Analyses by both the U.S. government and international groups indicate that there is not enough food to go around, and some families are going without.

Help was supposed to be on the way in the form of a resumption of U.S. aid, but the unraveling of the “Leap Day” food-for-weapons deal in the wake of North Korea’s announcement of its rocket launch means that conditions for the North’s chronically food-insecure population may not improve.

This picture stands in sharp contrast to numerous anecdotal reports of improved living standards, abundant cell phones, and even traffic jams in Pyongyang, though it is consistent with the less numerous reports of grim conditions in provincial cities. My colleague Stephan Haggard has dubbed this phenomenon “Pyongyang illusion” and believes that it may well go beyond typically observed urban- or capital-bias in governance, and represents an attempt by an insecure regime to forestall any Tahrir Square type activity in the capital city.

Macroeconomic imbalances and shortages have exacerbated the country’s problems with corruption, already assessed by Transparency International as the worst in the world. The situation not only represents a drag on growth, but could impair the regime’s capacity to govern, as the parochial interests of corrupt officials diverge from the policy preferences of Pyongyang. In the wake of the December death of leader Kim Jong-il, the state has responded with heightened control measures, including purging the security units who were supposed to pursue corrupt officials but who had evidently themselves been corrupted. But there are limits to the effectiveness of repression when the underlying problems remain unresolved.

In short, the country is beset with macro instability, deepening inequality, rising corruption, and a political leadership that appears to lack the vision or capacity to respond. Some current policies have allegedly been ascribed to Kim Jong-il’s “dying wish,” and it would not be surprising if the regime uses this rationale for some time. But at some point Kim Jong-un and the new leadership will have to take ownership of policy. That transition could well begin on the centennial of his revered grandfather’s birth.

Read the full article here:
Behind North Korea’s rocket launch, economic turmoil
East-West Centre
Marcus Noland
2012-4-12

Andrei Lankov writes in The Asian:

However, the decades-long experience of dealing with North Korea leaves little doubt: international sanctions do not work. When the sanctions were first introduced after the October 2006 nuclear test and tightened after the second 2009 nuclear test, many a hardliner believed that this was the way to press the North Korean government into a corner and make them consider denuclearization. In academic articles, newspaper pieces and blog entries, many a hawk was ready to interpret pretty much every piece of news that emanated from the North as a sign of ‘sanctioning beginning to bite’.

But what has happened to the North Korean economy over the past five to six years? Contrary to expectations, the era of sanctions has been, rather, a time of mild economic recovery and growth. The expectations of hardliners therefore have as yet, come to nothing.

(more…)

According to Yonhap:

Despite rising cross-border tension, the trade between South and North Korea surged 36 percent from a year ago to US$320 million in the first two months of this year, government data showed on March 16.

The data provided by the Korea Customs Service indicated that the trade via the inter-Korean industrial complex has not been affected by tensions on the Korean Peninsula.

South Korea slapped sanctions on the North in May 2010 in retaliation for the deadly sinking of a South Korean warship earlier that year, though it keeps intact the complex in the North’s western border city of Kaesong.

The complex, a key outcome of the inter-Korean summit in 2000, marries South Korean capital and technology with cheap labor from the North. It is now home to more than 120 South Korean small and medium-sized companies.

Tensions have flared anew in recent weeks as the two Koreas traded militaristic rhetoric against each other over Seoul’s defamation of the dignity of North Korea’s new leader Kim Jong-un and his late father, former leader Kim Jong-il.

Read the full story here:
Inter-Korean Trade Surges 36 Percent This Year
North Korea Newsletter No. 202 (March 22, 2012)
Yonhap

Population and Development Review
March 2012
Thomas Spoorenberg and Daniel Schwekendiek

Using the 1993 and 2008 national population and housing census data, this article uses population projection to reconstruct the population trends of North Korea over the 15 intercensal years. The article is structured as follows: a brief history of North Korea over the last 60 years is provided. The 1993 and 2008 census data—population by age and sex, fertility, and mortality indicators—are described and critically assessed. From this censusbased demographic evidence and other existing demographic estimates, the population dynamics of the country is reconstructed prospectively from 1993 to 2008 through population projections testing the plausibility of different population trends. Finally, counterfactual population projections are run in order to estimate (1) the demographic impact of the famine in the 1990s and (2) the human cost of the deteriorating living conditions in North Korea that were widely reported during the 1990s and 2000s.

Institute for Far Eastern Studies (IFES)
2012-3-15

The economic trade between China and North Korea has been robust since early this year. China’s Ministry of Commerce announced on February 29 that bilateral trade between the two countries just in January 2012 reached 418 million USD, an 18 percent jump over the same period last year. North Korea’s exports to China increased 7 percent to 139 million USD, while imports also increased 24 percent to $278 million USD.

Coal is North Korea’s largest export item to China — totaling almost half of total exports — and the total export sales are roughly worth 70 million USD. In contrast, crab and seafood exports to China were greatly reduced. This can be analyzed as one of North Korea’s measures to stock up on food to provide to its residents for the upcoming centennial birthday celebration of Kim Il Sung on April 15 (otherwise known as the Day of the Sun in the DPRK).

However, North Korea’s rice imports from China this past January plummeted 90 percent against the previous year. China’s Ministry of Commerce announced in the January 2012 Agricultural Import-Export Statistical Report that North Korea imported 614 tons (236,000 USD) in January compared to 18,140 tons (630 million USD) the same month last year, a drop of more than 94 percent. On the other hand, corn imports — the most popular grain import from China — tripled to 1,809 tons (596,000 USD) compared to last year’s import figure of 600 tons (174,000 USD).

Upon evaluation, China’s exports to North Korea appear to have increased one billion USD every three years. Based on the data collected from Chinese customs, the Korea Trade-Investment Promotion Agency (KOTRA) analyzed that China’s exports to North Korea were reported to have steadily increased from 1.08 billion USD in 2005, 2.03 billion USD in 2008, to 3.10 billion USD in 2011.

The major export items of China were crude oil and minerals, machinery, electrical equipment, vehicles and parts, and plastic products. These five categories showed steep growth from 30 to 60 percent against the previous year. Last year, China exported crude oil worth 518 million USD and petroleum products valued 192 million USD, which is a 59.1 percent and 83.4 percent rise, respectively.

In addition, 46.8 million USD of aviation kerosene and 58.31 million USD of aviation gasoline were exported to North Korea. Other export items such as fertilizers (134.4 percent) and grains (71.2 percent) steadily increased every year. KOTRA also confirmed China’s trade with North Korea peaked both in exports and imports last year, and the total trade volume towered at 5.64 billion USD. Last year, China’s exports to North Korea totaled 3.17 billion USD and imports from North Korea were 2.47 billion USD.

Trade regions that demonstrate robust economic activities include not only Dandong and Shinuiju but Hunchun, Rajin-Sonbong (currently being jointly developed) and Yanji (China)-Namyang (North Korea) areas. Trade volumes are increasing centered around these areas with expansion of bilateral economic cooperation projects and import of North Korean underground resources. Yanbian Prefecture put forth construction plans to build a new Tumen River Bridge connecting the two countries from this year, announcing the desire to continue to promote trade and economic cooperation with North Korea.

According to Yonhap:

South Korea has helped vaccinate nearly 4 million North Korean children against hepatitis B over the past two years despite tensions on the Korean Peninsula, a German relief agency official has said.

South Korea has provided vaccines worth US$2.37 million to North Korea from 2010 to February 2012 through Caritas Germany as part of its medical aid to the impoverished country, said Wolfgang Gerstner, a consultant of Caritas Germany.

Here is a little information on Hepatitis B:

Hepatitis B is irritation and swelling (inflammation) of the liver due to infection with the hepatitis B virus (HBV).

Hepatitis B infection can be spread through having contact with the blood, semen, vaginal fluids, and other body fluids of someone who already has a hepatitis B infection.

Infection can be spread through:

1. Blood transfusions (not common in the United States)

2. Direct contact with blood in health care settings

3. Sexual contact with an infected person

4. Tattoo or acupuncture with unclean needles or instruments

5. Shared needles during drug use

6. Shared personal items (such as toothbrushes, razors, and nail clippers) with an infected person

7. The hepatitis B virus can be passed to an infant during childbirth if the mother is infected.

Marcus Noland wrote a fantastic primer in Foreign Policy on North Korean statistics. Most of the article can be found below:

Last month, the South Korean news agency Yonhap ran a story about a report from a major South Korean think tank stating that North Korea’s GDP grew 4.7 percent in 2011. That think tank, the Hyundai Research Institute, used a combination of United Nations infant mortality data for 198 countries over the 2000-2008 period and North Korean crop data to estimate annual North Korean per capita income. While infant mortality and food availability correlate with income, one cannot meaningfully estimate year-to-year income changes with these two pieces of information alone.

(more…)

According to Yonhap:

The Unification Ministry said Tuesday it will allow South Korean companies to bring new equipment into their factories at a joint industrial complex in North Korea in an easing of sanctions on the communist nation.

Seoul has banned the establishment of new factories or expanding investment in the industrial complex under economic sanctions slapped on the North in May 2010 in response to its torpedoing of the South Korean warship Cheonan in the Yellow Sea that killed 46 men aboard.

The ministry’s decision, effective from this week, is a follow-up measure after a group of eight ruling and opposition lawmakers last month visited the border city of Kaesong to meet with South Korean company officials and help work out problems with operating factories there.

More than 50,000 North Koreans work for 123 South Korean firms operating in the industrial zone to produce clothes, utensils, watches and other goods. The project serves as a key legitimate cash cow for the impoverished communist country.

According to a survey conducted by the ministry of the 123 firms after the parliamentary delegation’s visit, 15 firms wanted to move 803 pieces of equipment worth 4 billion won (US$3.5 million) out of the complex.

Thirty-two companies had plans to remodel the current factories or facilities, the survey showed.

The ministry is also considering expanding bus routes for North Korean workers to help employers hire more workers living farther away from the complex, officials noted.

Read the full story here:
Seoul eases limits on factories, equipment in Kaesong complex
Yonhap
2012-3-6