North Korea economy

North Korea economy: The budget offers no hard numbers, yet again

May 25
– As usual, the main formal
business at the annual meeting on April 7th of the Supreme
People’s Assembly (SPA), North Korea’s rubber-stamp legislature,
was to hear economic and budget reports for 2010, and to approve
the budget for 2011. This was as opaque as ever, with a complete
absence of hard numbers. All that was given were a few
percentages, which–even if true–cannot be interpreted without a
baseline.

Until 2002 aggregate totals were published for public revenue and
expenditure, from which it was possible to calculate some
sectoral figures. However, this ceased from 2003, possibly
because it was difficult or embarrassing to deal with the
devaluation that had accompanied partial reform measures in July
2002. Even with such basic data withheld, North Korea will
neither attract serious foreign investment nor be eligible to
join the World Bank or the IMF. South Korean sources attempt to
fill in the blanks, apparently based on a single real figure
heard some years ago in a radio broadcast. The South’s Ministry
of Unification has put the North’s overall budget for 2011 at
Won567bn, which it equated to US$5.7bn–barely 2% of the South’s
budget of US$268bn for the year.

North Korea’s finance minister, Pak Su-gil, reported that in 2010
revenues were 7.7% higher than in 2009, and also 1.3% above their
planned level. Spending rose by 8.2% year on year and hit 99.9%
of the intended figure. By sector, light industry and agriculture
received allocations 10.9% and 9.4% larger, respectively, than in
2009. Science and technology increased by 8.1%, while
“implementation of the popular policies” (presumably social
services, perhaps including health and education, which were not
otherwise mentioned) received 6% more. Being less than the
average increase, this implies its share of total spending has
fallen.

In a particularly obscure phrase, Pak Su-gil added (as reported
by the KCNA) that spending on “the pilot domains of national
economy, basic industrial domains and capital construction last
year went up 8% and 12.9% respectively over [2009].” What look
like three terms here are presumably two: “the pilot domains of
national economy” are the same as “basic industrial domains”. In
North Korean parlance these sectors are the metal, power and coal
industries, and railway transport.

Confusingly, but in line with tradition, defence spending was
given on a different basis: as a proportion of total expenditure,
at 15.8%. This figure hardly varies from year to year–it is the
same for 2011, which would imply a 8.9% rise in defence spending.
Many observers suspect this is an understatement, with much
military spending hidden under other headings. In January South
Korea’s state-run Korea Institute of Defence Analyses (KIDA)
claimed that the North’s actual military spending in 2009 was
US$8.8bn, or 15 times the official figure of US$570m and
equivalent to one-third of its total gross national income. (The
KIDA figures are compiled on a different basis to that used by
the unification ministry.) Even this higher figure is less than
the South’s military expenditure.

The Northern finance minister’s projections for 2011 were also
obscure. Revenue is slated to increase by 7.5% year on year.
Again switching between different sorts of percentages, Pak
Su-gil said that 83.9% of the total will come from central
finances and 16.1% from local budgets. By sector, the bulk of
revenue–some 78.5%–will derive from transaction taxes and state
enterprise profits. Among lesser sources, “the profits of
co-operative organisations, the fixed-asset depreciation, the
income from real estate rent and social insurance are expected to
swell 3.8%, 1.4%, 0.7% and 0.4% respectively” compared with the
previous year.

The balance of planned spending by sector in 2011 differs
significantly from 2010, although again Pak Su-gil did not point
this out. Overall expenditure is set to rise by 8.9% year on
year. Light industry will get 12.9% more than in 2010 and “a huge
budgetary disbursement will be made for local industry, too”.
Agriculture will receive a 9% increase, and “funds needed for
farming will be provided on a priority basis”. Yet “pilot domains
and basic industries”, essentially comprising heavy industries,
are to get 13.5% more than in 2010. This is despite the fact
that, according to a prominent newspaper editorial earlier in the
year highlighting policy, light industry was supposed to be the
core priority this year.

As in 2010, the largest increase of all, of 15.1%, will be
provided to capital construction. Science and technology will get
10.1% more, to help reach the goals of a five-year plan for state
scientific and technological development, due to end in 2012. No
details of this plan are known; North Korea has announced none of
its economic plans publicly since the last seven-year plan ended
in 1993 with a rare admission that planned targets had not been
met.

In general, the finance minister urged “all domains and units of
the national economy to give full play to the mental power of the
producer masses, economise manpower, materials and funds and cut
down as much as possible non-productive expenditure and thus
carry out the monthly and quarterly plans for budgetary revenue
without fail”. The latter phrase hints at the existence of more
detailed figures, undisclosed publicly. The emphasis on
economising could also suggest tight fiscal constraints–as well
as an appeal to the Communist state’s philosophy of juche, or
self-reliance.

A speech to the legislature by the premier, Choe Yong-rim,
provided little extra background to the budget. Past premier
reports have sometimes given useful detail, if only
descriptively. This time the KCNA reported the premier in barely
100 words. His claims of “signal advances” and “big successes” in
2010 were greeted with scepticism by most external observers.

-0- May/25/2011

North Korea economy: The UN launches an emergency food programme
– On April 29th the UN
Children’s Fund (UNICEF) and the World Food Programme (WFP)
announced a one-year US$200m emergency plan. The scheme aims to
feed people affected by crop losses and a particularly bitter winter. It is unclear how this will be financed. UNICEF hadearlier reported that, having sought US$10m for its work in NorthKorea in 2010, it received only US$ 2m. Undaunted, it has launched a US$20m appeal to fund work in five provinces with the worst malnutrition rates, targeting 165,000 pregnant or breast-feeding women and 400,000 young children as the most vulnerable.The WFP seeks to provide 297,000 tonnes of grain plus 137,000 tonnes of fortified foods. This follows a month-long Rapid Food Security Assessment Mission conducted in February-March 2011 by the same agencies, together with the UN Food and Agriculture Organisation (FAO). The report, which was published in March, warned of the high risk of a food crisis. The state ration system, which provides barely more than one-half the average daily calorific requirement, is due to run out of food in May. In the lean season (May-July) over 6m people, or one-quarter of the population, may need food assistance.

The mission declared that in 2010/11 (November-October)
production of staple foods is likely to reach 4.3m tonnes–some
232,000 tonnes below the estimate made by an earlier mission in
late 2010, owing to the severity of the winter. It noted that the
amount of potato seed in winter storage that has been damaged is
higher than normal, and 2011 spring production will likely be 60%
of the planned level. Meanwhile, production of pickled vegetables
(kimchi) was affected by the heavy rains in August-September
2010. The mission concluded that North Korea would need to import
1.1m tonnes of cereal, but that officials plan to import only
200,000 tonnes at present.

Others are sceptical, for reasons that–despite official
denials–are hard to separate from the wider political stalemate
on the peninsula. The US is said to be mulling over assistance,
despite North Korea’s nuclear obstinacy. The main obstacle is
South Korea, whose hardline government summarily scrapped food
aid in 2008, even before the Northern attacks in 2010. The South
professes to doubt how bad the North’s situation really is,
claiming variously that it holds large grain stockpiles in case
of war, or wants to build up supplies so as to celebrate the
centenary of its founder Kim Il-sung next year with a show of
generosity by his son.

The FAO’s concerns are animal as well as human. On March 24th,
after a joint mission to North Korea with the World Organisation
for Animal Health (OIE), it said that vaccines and other
materials worth US$1m were urgently needed to help to combat
foot-and-mouth disease, which has struck eight out of 13
provinces. This is a modest sum compared with the disaster in
South Korea–a likely source of the North’s epidemic–where since
November 3.5m cattle and pigs have been culled, with losses of
US$2.6bn. Although the worst is now thought to be over, both
Koreas were still reporting fresh outbreaks in April.

The FAO added that North Korea’s veterinary services need
modernising, especially biosecurity measures and improving
laboratory infrastructure and capacity. It tallied the country’s
total livestock population at 577,000 cattle, 2.2m pigs and 3.5m
goats. The latter are an important source of dairy products,
while cattle, besides dairy use, are “a key source of draft
power”. The latter comment highlights how farming, once
mechanised, has regressed since access to cheap oil ended with
the collapse of the former Soviet Union. Meat is now a rarity in
North Koreans’ diets, reserved only for special occasions.

-0- May/25/2011

North Korea economy: Trade with China and South Korea rose in 2010

— The Korea International
Trade Association (KITA), a private-sector body based in the
South Korean capital, Seoul, in March published a comparison of
North Korea’s aggregate trade in 2010 with China and South Korea.
The North’s two main trading partners together make up at least
80% of the country’s total trade.

Unsurprisingly, given inter-Korean tensions in 2010, China pulled
ahead both in relative and absolute terms. Its trade with North
Korea in 2010 totalled US$3.5bn, representing a year-on-year
increase of 32%. Less expectedly, inter-Korean trade rose too,
albeit by a slower 14%, to a record US$1.9bn.

South Korea supposedly barred trade with the North in May 2010
after the Cheonan sinking, but it exempted the Kaesong Industrial
Complex (KIC), a zone in the North in which many Southern
companies operate. Exchanges involving the KIC (mainly raw
materials and equipment going in, and finished goods coming out)
soared by 53.4% from 2009, to US$1.4bn. Non-KIC inter-Korean
trade did, however, fall by 54%, to US$117.8m.

As an organization of South Korean exporters, KITA is concerned
about competition with China for the Northern market. The South
had previously been the North’s main export market, and in 2007
inter-Korean trade reached 91% of the Sion-North Korean total.
However, since 2008, when the conservative Lee Myung-bak became
South Korea’s president, the proportion has slipped, falling to
55% of Sion-North Korean trade in 2010.

KITA’s data are backed up by figures from World Trade Search
(WTS), a Japan-based firm which tracks North Korea’s trade.
According to its statistics, North Korea’s US$3.46bn total trade
with China in 2010 was, as ever, unbalanced. Imports from China
reached US$2.3bn, compared with exports to that country of just
US$1.2bn. However, exports accelerated from just US$341m in the
first half of the year to US$840m in the second. Imports showed a
similar but less marked trend, expanding from US$939m in
JanuaryJune to US$1.3bn in JulyDecember. This probably reflects a
sharp pick-up in commodity prices in 2010, which may have
affected the value of Northern imports of oil and its exports of
iron ore and coal. WTS figures show that North Korea exported
goods worth US$1bn to the South in 2010, against imports of
US$866m.

Chinese government data indicate that the North’s trade with
China continues to expand massively. China’s imports from North
Korea in the first quarter of 2011, at US$401.5m, were over three
times the level in the year-earlier period (US$126.2m). The rise
appears largely owing to soaring coal exports, although iron ore
exports were also substantially higher. China’s exports to the
North were also up by 59.3% year on year in the period, to
US$571.2m.

Switzerland Economy

Sometimes I like to dream of Switzerland as being a little island of exceptionalism in the world, but alas, the morning alarm bell is unforgiving. Despite prospects of a gold currency or taking a leadership position in criticizing ridiculous US tax policies, we must remember that Swiss fiscal and financial culture is anything but “neutral” or independent, as their international politics are known to be. In fact, the educational qualifications of the Swiss financial and government elite, as well as their close relations with international counterparts, just about guarantees a similar tainting of economic thinking with Keynesianism.

                                 Switzerland's economy over all going very good. From starting its GDP is going not well but now a days it is going very well. About 2009 it is going to downward. Q! and Q3 shows the negative slope of real GDP. But in 2010 and 2011 real GDP going upward 10Q1,10Q3 and 11Q1,11Q3 show the positive slope.

New Zealand GDP Growth Rate

The Gross Domestic Product (GDP) in New Zealand expanded 0.80 percent in the third quarter of 2011 over the previous quarter. Historically, from 1987 until 2011, New Zealand's average quarterly GDP Growth was 0.56 percent reaching an historical high of 2.70 percent in September of 1999 and a record low of -2.60 percent in March of 1991. Over the past 20 years the government has transformed New Zealand from an agrarian economy dependent on concessionary British market access to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes - but left behind some at the bottom of the ladder - and broadened and deepened the technological capabilities of the industrial sector. This page includes: New Zealand GDP Growth Rate chart, historical data, forecasts and news. Data is also available for New Zealand GDP Annual Growth Rate, which measures growth over a full economic year.

New Zealand GDP Up 0.8% in Q3
New Zealand Gross domestic product was up 0.8 percent in the September 2011 quarter, following a 0.1 percent increase in the June 2011 quarter. The increase in the latest quarter is the fourth consecutive quarter of growth following a decline of 0.1 percent in the September 2010 quarter.

In the September 2011 quarter, the increase in economic activity was due to rises of 0.5 percent in the services industries, 0.8 percent in the goods-producing industries, and 0.5 percent in the primary industries.

The main movements by industry this quarter were: manufacturing (up 2.3 percent) – food, beverage, and tobacco manufacturing was the largest contributor; retail, accommodation, and restaurants (up 2.5 percent) – the largest quarterly increase since the March 2007 quarter; finance, insurance, and business services (up 0.6 percent) – the fourth consecutive quarter of growth; construction (down 2.2 percent) – now at its lowest quarterly level since the June 2002 quarter.

The expenditure measure of GDP rose 1.0 percent in the September 2011 quarter. The expenditure and production measures of GDP are conceptually the same. The production measure of GDP measures the volume of goods and services produced in the economy, while the expenditure measure shows how those goods and services were used.

Economic activity for the year ended September 2011 was up 1.3 percent when compared with the year ended September 2010. Expenditure on GDP for the year ended September 2011 was up 1.4 percent when compared with the previous year.

GDP Growth Definition

Economic growth is the increase in value of the goods and services produced by an economy. It is conventionally measured as the percent rate of increase in real gross domestic product, or GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced. In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment," which is caused by growth in aggregate demand or observed output.As economic growth is measured as the annual percent change of National Income it has all the advantages and drawbacks of that level variable. But people tend to attach a particular value to the annual percentage change, perhaps since it tells them what happens to their pay check.

The real GDP per capita of an economy is often used as an indicator of the average standard of living of individuals in that country, and economic growth is therefore often seen as indicating an increase in the average standard of living.However, there are some problems in using growth in GDP per capita to measure general well being.GDP per capita does not provide any information relevant to the distribution of income in a country. GDP per capita does not take into account negative externalities from pollution consequent to economic growth. Thus, the amount of growth may be overstated once we take pollution into account. GDP per capita does not take into account positive externalities that may result from services such as education and health. GDP per capita excludes the value of all the activities that take place outside of the market place (such as cost-free leisure activities like hiking).

Economists are well aware of these deficiencies in GDP, thus, it should always be viewed merely as an indicator and not an absolute scale. Economists have developed mathematical tools to measure inequality, such as the Gini Coefficient. There are also alternate ways of measurement that consider the negative externalities that may result from pollution and resource depletion (see Green Gross Domestic Product.)The flaws of GDP may be important when studying public policy, however, for the purposes of economic growth in the long run it tends to be a very good indicator. There is no other indicator in economics which is as universal or as widely accepted as the GDP.Economic growth is exponential, where the exponent is determined by the PPP annual GDP growth rate. Thus, the differences in the annual growth from country A to country B will multiply up over the years. For example, a growth rate of 5% seems similar to 3%, but over two decades, the first economy would have grown by 165%, the second only by 80%      

Economic Outlook : Turkey

The Turkish economy has shown remarkable performance with its steady growth over the last eight years. A sound macroeconomic strategy in combination with prudent fiscal policies and major structural reforms in effect since 2002, has integrated the Turkish economy into the globalized world, while transforming the country into one of the major recipients of FDI in its region.

The structural reforms, hastened by Turkey’s EU accession process, have paved the way for comprehensive changes in a number of areas. The main objectives of these efforts were to increase the role of the private sector in the Turkish economy, to enhance the efficiency and resiliency of the financial sector, and to place the social security system on a more solid foundation. As these reforms have strengthened the macroeconomic fundamentals of the country, inflation drastically decreased to 6.4 percent by the end of 2010, down from 30 percent in 2002, while the EU-defined general government nominal debt stock fell to 41.6 percent from 74 percent in a period of eight years between 2002 and 2010. Hence, Turkey has been meeting the “60 percent-EU Maastricht criteria” for the public debt stock since 2004.

As the GDP levels more than tripled to USD 736 billion in 2010, up from USD 231 billion in 2002, GDP per capita soared to USD 10,079, up from USD 3,500 in the given period.

The visible improvements in the Turkish economy have also boosted foreign trade, while exports reached USD 114 billion by the end of 2010, up from USD 36 billion in 2002. Similarly, tourism revenues, which were around USD 8.5 billion in 2002, exceeded USD 20 billion in 2010.

Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the 6th largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2010.

Prior to the recent global recession which hit all economies throughout the world, the Turkish economy sustained strong economic growth for 27 quarters consecutively, making it one of the fastest growing economies in Europe. However, the global financial crisis has considerably challenged the macroeconomic and financial stability of many economies by adversely affecting financing facilities and external demand, thus causing a significant slowdown in all global economic activities.

While the financial markets in Turkey proved resilient to the crisis, the decrease in external demand and slowing international capital flows have had a negative impact on the economy, thus causing an economic contraction in 2009. However, the perceived positive developments in the economy showed signs of a fast recovery beginning as early as the last quarter of 2009, with an impressive 5.9 percent economic growth rate, hence making Turkey one of the fastest recovering economies in the world. Its robust economic growth continued in 2010 as well, having reached 12 percent, 10.3 percent, 5.2 percent and 9.2 percent in the first, second, third and fourth quarters of 2010 respectively, thus achieving an overall growth rate of 8.9 percent throughout 2010. Turkey, with such a robust economic performance, stood out as the fastest growing economy in Europe and one of the fastest growing economies in the world.

2010 Real GDP Growth (%)

Source: IMF World Economic Outlook April 2011, Turkish Statistical Institute (TurkStat)

Moreover, according to the OECD, Turkey is expected to be the fastest growing economy of the OECD members during 2011-2017, with an annual average growth rate of 6.7 percent.

Annual Average Real GDP Growth (%) Forecast in

OECD Countries 2011-2017

Source: OECD Economic Outlook No: 86

• Institutionalized economy fueled by USD 94 billion of FDI in the past eight years and ranked the 15th most attractive FDI destination for 2008-2010 (UNCTAD).
• 16th largest economy in the world and 6th largest economy compared with EU countries in 2010 (GDP at PPP, IMF-WEO).
• Robust economic growth over the last seven years with an average annual real GDP growth of  4 percent.
• GDP reached USD 736 billion in 2010, up from USD 231 billion in 2002.
• Sound economic policies with tight fiscal discipline.
• Strong financial structure resilient to the global financial crisis.
• Rapid recovery from the global financial crisis.

economy and trade : Argentina

Primary Industry

Argentina is rich in natural resources with a geological and climatic situation particularly suitable for developing forestry, agriculture, mining and fisheries. It also boasts of large petroleum, gas and uranium reserves.

Agriculture: Argentina is famous for its agricultural production. With over 54 million head of cattle, Argentina’s beef is renowned around the world. Annual production of cereals and oilseeds exceeds 70 million tonnes, which makes Argentina one of the main exporters of these products and their derivatives. One of the country's largest sheep grazing regions, which is also one of the largest regions for growing fruit and vegetables, is found in Patagonia, in the south. The typical farms associated with this production are surprisingly similar to those found in Australia.

Mendoza on the western border is the centre of wine production. Argentina is the worlds fifth-largest producer of wine. Most Argentineans drink wine with every meal, a traditional custom introduced by the European immigration. Exports are continually growing,

Mining: The Andean Mountains provide Argentina with rich mineral deposits. Some of the minerals which are being mined at present are, copper, tin, lead, zinc, gold, silver, and uranium. The main exploitation of copper and gold, Minera de la Alumbrera, in the Province of Catamarca, is an Australian venture.

Gas and Oil: are important resources being increasingly exported to the neighbouring countries and to the world market. Together with mining products they make out for 15% of total exports.

Manufacturing Sector

The industrial sector includes manufacturing and construction. Among Argentina’s manufactured goods are processed food, textiles, clothing, metallic and non-metallic mineral products, wood products, paper, pharmaceutical products, chemicals and petrochemical products, aluminium, steel, cars, electrical machinery and appliances, machine tools, turbines, cranes, agriculture machinery, and space and nuclear products.

Construction, engineering and consultancy activities have developed to an important stage, extending to the Latin-American market and other countries.

Transport

Land: Public transport includes buses, railways and subways. Most of Argentina's goods are transported by truck although railways are becoming increasingly important in the transportation of domestic cargo.

Air: The most widely-known national airline is Aerolineas Argentinas which has been operating for more than 60 years. It covers nearly all the domestic routes and has also an important continental and inter-continental network. There are also other private airlines that have been growing in recent years. Aerolineas Argentinas offers three direct flights a week between Sydney and Buenos Aires, with a short stopover in Auckland, New Zealand.

Water: There are numerous coastal and international ocean and river companies that offer freight or passenger transport. Several Ocean Lines serve the route between Australian and Argentinean ports.

Communications

Postal and telecommunications services are run by private enterprises which have been operating in free competition since the beginning of 2000. The first post office opened in 1814. Satellite tracking stations and digital technology provide domestic and international telephone communications linked to every country in the world. There are about 40 television stations and 200 radio stations in Argentina.

Export

Argentina's exports, which reached 30 billion $US in 2003, are composed of 24% primary agricultural commodities, 13% fuels and minerals, 36% processed agricultural products and foodstuffs, and 27% industrial products.