A report issued this week by UBS shows North Korea could account for up to 24% of the Korean Peninsula's total gross domestic product in 20 years under reunification with the South. The rogue state currently accounts for but 1.1% of the regional economy.
Tensions around the nuclear state have eased after North Korean leader Kim Jong Un met with his counterparts from South Korea and U.S. While it's far from clear whether the two halves of the peninsula will ever reunify, they may be closer to establishing two peaceful, independent states, which by UBS' analysis would also help growth.
A peace treaty formally ending the Korean War and opening the North-South border would increase foreign investment, helping the economy, said one UBS economist Tuesday.
The report goes on to say North Korea could also then utilize its natural resources and well-educated labor force, noting compulsory secondary education. UBS also said that, in 2016, nearly half of economic growth came from the industrial sector, just under a third from services, and about a fifth from agriculture.
North Korea's natural resources is worth about $4 trillion U.S.
However, that being said, North Korea remains tiny and backward. Its centralized economy is the only one whose income level has fallen over the past 30 years, for a gross domestic product of under $17 billion versus Vietnam's $205.3 billion in 2016, according to UBS. Survival is highly dependent on China, and sanctions to counter North Korea's nuclear threat have put further pressure on the economy.
Moreover, the World Poverty Clock says nearly 40% of North Korea's 25.5 million people live in poverty.
