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North Korea's economy is believed to have grown 1.3 percent in 2012 -- the first full year under new leader Kim Jong-Un and the fastest pace in four years, the South's central bank said Friday.
The rise followed a 0.8 percent gain in the previous year, the Bank of Korea said in its annual report.
When the North's late leader Kim Jong-Il died in December 2011 he left a country in dire economic straits. His son, Kim Jong-Un, has called for a "radical turnabout" in the impoverished country's economy.
The North's gross domestic product contracted 0.9 percent in 2009 and 0.5 percent in 2010, after a 3.1 percent increase in 2008.
The North's nominal gross national income (GNI) stood at 33.5 trillion won ($29.7 billion) last year, only 2.6 percent of the South's GNI estimated at 1,279.5 trillion won, the bank said.
The South Korean bank attributed the North's growth last year to gains mainly in the manufacturing sector.
The bank said the gain in manufacturing partly reflects greater power supply under Kim Jong-Un, who has also boosted production in livestock raising and agriculture.
In 2012, the North's agricultural and fishery industry grew 3.9 percent year-on-year, while manufacturing grew 1.6 percent -- a turnaround from a 3.0 percent contraction in 2011, the bank said.
The North's foreign trade stood at $6.8 billion last year, up 7.1 percent from a year ago, the bank said. The United Nations has tightened sanctions on Pyongyang, but its trade with China has increased sharply.
The bank collects data from the National Intelligence Service and other South Korean institutions specialising in the North.
The North's economy has been beset by serious shortages of electricity and raw materials, along with persistent food shortages.
International sanctions brought by the North's pursuit of ballistic missiles and atomic weapons have restricted its access to international credit.
The country's economy fell into trouble in the 1990s after the break-up of the Soviet Union and the loss of its crucial aid. It suffered a famine in the mid-1990s that killed hundreds of thousands.