North Korea’s trade deficit reached a record high in the first half of this year, due largely to the sanctions imposed since February, a local think-tank’s report showed.
According to a report by Korea Institute for International Economic Policy, trade between North Korea and China in the first six months this year was $2.5 billion, 0.8 percentage points down from the same period last year.
Following the series of international sanctions imposed against the communist regime, the North’s exports to China decreased by 24 percent ($840 million), the report said. The drop was caused largely by the fall in coal exports, which account for about 40 percent of North Korea’s exports.
The report said that due to China’s large role in North Korea’s economy, the fall in North Korea-China trade could lead to a real impact on the economy of the rogue regime. According to the report, North Korea relies on China for about 90 percent of its international trade.
By item, the export of mineral resources including anthracite have dropped by 54 percentage points compared to a year ago, giving way for apparels to become their main exporting goods. The apparels export was $270 million, also seeing a fall of 21.8 percentage points.
Only seafood has shown an increase by 88.8 percentage points, rising from $47 million to $89 million.
On the other hand, the data showed that the reclusive regime’s imports have increased by $1.66 billion, 18 percentage points year on year. The figure excludes imports of crude oil.
With such a trade gap, the goods balance appeared as $810 million, recording the highest trade deficit of all time.
Choi Yoo-jeong, the researcher who contributed to the report said the series of sanctions imposed in the recent months are likely to further cut down transactions between the two economies.
“North Korea will be seeing an inevitable decline in its foreign trade as the sanctions have abolished its export routes for its major goods,” she explained in the report. “While the North is expected to diversify its means to earn foreign money, but it will not be easy with the new sanction.”
On Sept. 12, the UN Security Council unanimously approved new sanctions on North Korea which puts a cap on the import of its crude and refined petroleum products and bans all textile exports.
Following the Resolution 2375, the United States also called for its member states to cut off work permits to North Koreans, in bid to up pressure after the North Korea conducted its sixth and strongest nuclear test on Sept. 3. It claimed the detonation was a hydrogen bomb.
The August sanctions had banned member states from importing not only anthracite but also iron and marine products that offset a sharp decline in the North’s exports.
North Korea’s economy is likely to face major blows, as China ordered its companies in the country to close down within 120 days of the latest September sanction, on Thursday.
China’s Commerce Ministry said the action comes in line with the fresh UNSC resolution and that the firms, including their joint ventures shut down no later than Jan. 9.
By Jo He-rim (firstname.lastname@example.org)