North Korea’s economy has been slowly shrinking after South Korea cut-off its trade in protest to the sinking of a warship. "The North is very likely to see its economy shrink this year," said the report from South Korea's state-run Korea Development Institute (KDI), without estimating a figure.
A further shrinkage this year could spark an economic crisis, Tuesday's report said. “North Korea's economy could be hurled into a very precarious situation," it said.
South Korea in May announced a prohibition on most trade after a multinational investigation concluded that a North Korean torpedo sank the warship in March.
The United Nations in June last year tightened sanctions following the North's missile launches and nuclear test earlier in the year.
N.Korea economy to shrink on trade cutoff [Channel NewsAsia, 6 July 2010]
N.Korea economy to shrink on trade cutoff: report [AFP, 6 July 2010]