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NorK economy forecast to shrink this year
According to the report by the state-run Korea Development Institute, North Korea's economy will continue to shrink this year following a 0.9 percent contraction a year earlier. It did not provide an exact growth number for 2010. The gloomy forecast is based mostly on frozen trade after the South cut most of business relations with Pyongyang following a probe indicating that the communist country's torpedo attack sank one of its naval ships in March, killing 46 sailors. "The North is very likely to see its economy shrink this year," the report said. "Our outlook is based on a forecast that its external trade will likely post a setback." South Korea accounts for more than 30 percent of the North's trade, serving as one of its key business partners along with China.
The economy of the reclusive country has been in a slump over the past few years. In 2006, it shrank 1.1 percent, followed by a 2.3 percent setback in 2007. The economy bounced back in 2008 by growing 3.7 percent but it proved to be short-lived by shrinking again last year. A further contraction could prompt an economic crisis for the already-impoverished country, the report noted. "North Korea's economy could be hurled into a very precarious situation," the report said. "As experienced by the nation in the mid-1990s, a crisis could be prompted more likely by consecutive contractions for relatively long period of time, rather than a one-off steep economic downturn." Posted by: Steve White 2010-07-06 |
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