[PEN-L:27409] N Korea could face new economic crisis

["Ulhas Joglekar" <joglekarulhas@xxxxxxxxxxx>]

The Times of India

WEDNESDAY, JUNE 26, 2002

N Korea could face new economic crisis

AFP

SEOUL: North Korea could be hit by a new economic crisis despite a third
year of increased trade last year, South Korea's state-run trade agency said
on Wednesday.

The Korean Trade-Investment Promotion Agency (KOTRA) said falling
international handouts to the Stalinist state could unleash new economic
troubles.

"It cannot be ruled out that North Korea, which is failing to solve chronic
currency, energy and food shortages, could slip into its worst ever economic
crisis if aid dwindles," KOTRA said.

The North relies heavily on foreign handouts to feed its population and keep
the crippled economy moving.

The focus of international aid has shifted to Afghanistan from North Korea
since the US-led anti-terrorist war last year, KOTRA said, highlighting the
lack of progress in improving ties between the North and the two biggest
international donors -- the United States and Japan.

KOTRA said the North's trade volume totaled $2.27 billion last year, up from
$1.97 billion in 2000, 1.48 billion dollars in 1999, and 1.44 billion
dollars in 1998.

After nine consecutive years of contraction up to 1998, the North's economy
grew 3.7 per cent in 2001 as the communist state struggled to ease its food
crisis, according to South Korea's central bank.

But the North's trade volume may be reduced as many imports come from
foreign aid, including Japan's $160 million worth of food last year,
according to KOTRA data.

KOTRA compiled reports from its trade offices around the world. The trade
figure does not include inter-Korean trade as the South Korean government
classifies it as internal trade. North Korea does not give official trade
figures.


China remained the biggest trader for North Korea last year with 739.85
million dollars in volume, a third of the North's total trade, KOTRA said.

Japan came next with $474.69 million in trade with the North last year,
followed by India with 157.85 million dollars. Trade between the North and
the European Union countries have steadily increased as the communist state
stages an active campaign to improve ties, recording $311.41 million last
year.

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