Introduction

It has been speculated that North Korea''s industry and real economy achieved moderate growth in 2016 owing to significant improvements in unfavorable factors from 2015 and the less-than-expected impact from economic sanctions. Moreover, the 70-Day and 200-Day Battles led to an intensive input of labor and drove production activities.

Specifically, there was a recovery from the ongoing drought, which dealt a harsh blow to North Korea''s industrial performance in 2015. According to the BOK’s estimation, the drought drove down hydropower generation by 20 percent in 2015 year-on-year; this dampened the overall industry, including manufacturing. Fortunately, the precipitation rate began to rise above the seasonal average from the second half of 2015, eventually increasing hydropower generation in 2016. Additionally, the economic sanctions imposed by the international community had a limited effect on North Korea''s industry, at least in 2016. Anthracite exports to China slightly grew as did the import of machinery and raw materials from the latter. In the meantime, the Seventh Party Congress and the 70-Day and 200-Day Battles appear to have played an important role in increasing investment and production activities throughout industry in the short-term.

It has been also estimated that power generation reversed the negative growth of the previous year while the mining industry exhibited modest growth, mainly led by the coal mining sector. Manufacturing grew somewhat on the back of year-on-year increases in the import of equipment and raw materials as power supply rose and speed battles induced a larger input of labor and resources, amongst others. The construction sector demonstrated vibrant production activities, although growth was presumably limited since large-scale public works projects were concentrated around the founding anniversary of the Workers'' Party of Korea of 2015.

* This article is part of 2016 The DPRK Economic Outlook

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