What now for the North Korean economy?

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Following the death of North Korean head of state, Kim Jong-il, the economy could take a different turn of the next year.

There are around 25 million North Koreans compared with the 48 million people currently residing in South Korea. North Korea has recently published a few statistics relating to the country’s actual size Gross Domestic Product (GDP). Based on this, experts have been able to determine that the North Korean economy has shrunk slightly over the last two years.

In terms of the total GDP the size of the economy is that of pre-war Iraq and now stands at $40bn.

Before 1945 North Korea was very industrial and South Korea was largely agricultural. The landscape of the two countries has changed somewhat since then and now the situation is very much reversed.

Only about 2% of South Koreas GDP comes from agriculture now compared to the agricultural export from North Korea, which is 20-25% of the total GDP. Until the mid 1970s North Korea was doing pretty well with a much higher GDP than South Korea. Does this mean it’s worth investing?

Unless you are Chinese citizen it can be very hard to obtain a visa. Relations between North Korea and the United States are rocky and using dollars might not be favorable for both parties. Despite this, over the last decade North Koreans have taken t he Euro as their foreign currency of choice.

As for the future of North and South Korea this lies in the development of new industries working together to improve Koreas total output. Yet they are still technically at war.

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What now for the North Korean economy?

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