North Korea Defies Isolation With Fastest Growth Since 2008

North Korea’s economy is estimated to have expanded at the fastest pace since 2008 last year, even as Kim Jong Un’s regime faced increasing isolation over its missile tests and nuclear-weapons program.

Gross domestic product in the totalitarian state increased 1.3 percent in 2012 after a 0.8 percent rise in 2011, according to calculations released by South Korea’s central bank today in Seoul. The North’s economy has contracted in four of the last seven years, the Bank of Korea’s data show.

Last year marked Kim’s first full 12 months in power after succeeding his late father Kim Jong Il in December 2011. He vowed in April last year the totalitarian regime’s 24 million people will “never again tighten their belts,” days after an unsuccessful ballistic missile test that broke a deal with the U.S. for 240,000 tons of food in exchange for a moratorium on weapons testing.

“Agriculture and fisheries expanded 3.9 percent due to greater fertilizer use in corn and rice production,” the BOK said in an e-mailed statement. Hog and poultry production rose 12.3 percent from a year earlier, the BOK said.

The data offer a peek into the opaque economy of North Korea, which doesn’t publish official figures. South Korea’s central bank releases annual estimates of the North’s economic conditions based on information from the South’s National Intelligence Service and related organizations.

Per Capita Income

Kim Jong Un waged a campaign a year ago to increase crop yields, revising that into a policy that calls for developing its economy and nuclear program at the same time. The international community maintains that the North must give up its atomic ambitions to receive support and join the global economic systems.

A surge in food products and cigarette production helped light industry expand by 4.7 percent, according to the BOK. The mining industry rose 0.8 percent as coal production gained 1.2 percent. The construction industry weakened 1.6 percent.

North Korea’s per capita income was about 1.37 million won ($1,220) last year, or one-nineteenth of South Korea’s, according to the BOK’s estimates. Foreign trade, excluding commerce with the South, rose 7.1 percent to $6.8 billion, with exports increasing 3.3 percent to $2.9 billion and imports rising 10.2 percent to $3.9 billion, the BOK said.

Stunted Growth

More than 25 percent of North Korean children have stunted growth from chronic malnutrition and two-thirds of the country’s 24 million people don’t know where their next meal is coming from, according to the United Nations. Some 2.8 million North Koreans need of regular food assistance.

Inter-Korean trade expanded 15 percent to $1.97 billion, 99.5 percent of which was from exchanges at an industrial complex in the North Korean border city of Gaeseong operated jointly by the North and South, the BOK said.

North Korea shut the Gaeseong factory park in April to protest tightened United Nations sanctions and U.S.-South Korean military drills. The two Koreas will hold talks next week to discuss a way to resume operations there.

Before it's here, it's on the Bloomberg Terminal.