North Korea’s young leader Kim Jong-un called for a “radical turnabout” in the impoverished country’s economy in a rare New Year’s address on Tuesday that also urged improved relations with the South. While the heart of his lengthy speech was devoted to turning the North into an “economic giant” and raising living standards, Kim stressed that military power remained a national priority. “The military might of a country represents its national strength. Only when it builds up its military might in every way can it develop into a thriving country,” he said in a voiced message broadcast on state television. The address will be closely parsed for meaning in South Korea which just elected its first woman president, the conservative Park Geun-hye, who has signalled a willingness for greater engagement with Pyongyang. An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the North and the South The voiced message was the first of its kind since Kim’s grandfather, the North’s founding president Kim Il-sung, delivered one in 1994, the year of his death. Kim’s comments on the economy are likely to fuel speculation that he might be set to implement economic reforms that observers have been predicting since he came to power a year ago after the death of his father Kim Jong-il. This will be a year of “great creations and changes in which a radical turnabout will be effected”, Kim said, adding that “the building of an economic giant is the most important task” facing the country. Praising the success of the North’s space scientists in launching a long-range rocket last month, Kim said a similar national effort was required on the economic front. “The entire party, the whole country and all the people should wage an all-out struggle this year to effect a turnaround in building an economic giant and improving the people’s standard of living,” he said. When Kim Jong-il died, he left a country in dire economic straits – the result of a “military first” policy that fed an ambitious missile and nuclear programme at the expense of a malnourished population. Despite a rise in staple food output, daily life for millions of Koreans is an ongoing struggle with under-nutrition and a lack of vital protein and fat, according to a recent World Food Programme report. Some observers had seen a glimmer of reformist hope in the handover of power to the Swiss-educated Kim Jong-un, only in his late 20s. Instead, Kim focused on consolidating his power base with a series of high-profile personnel changes, notably within the military elite, while at the same time pursuing Kim Jong-il’s missile programme. Tuesday’s address called for a “radical” increase in output across the board, from light and heavy industry to agriculture, as well as an improved transport infrastructure. But it offered no specific policy directives for how this might be achieved by the isolated state which relies on its sole major ally China for 70 per cent of its foreign trade. Kim’s address came as the UN Security Council is still considering how to punish Pyongyang for its recent rocket launch, which most of the world saw as a disguised ballistic missile test. The speech lauded the launch as a historic national achievement and stressed the need to develop more “sophisticated military hardware” in order to bring about a “fundamental change” in combat preparedness. On South Korea, Kim sounded a conciliatory note and urged a scaling down of tensions on the Korean peninsula. “An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the North and the South,” Kim said. “The past records of inter-Korean relations show that confrontation between fellow countrymen leads to nothing but war,” he said. South Korean president-elect Park Geun-hye has distanced herself from outgoing President Lee Myung-bak’s hardline policy towards Pyongyang and spoken of the need for greater engagement with the North. But in her first post-election victory policy statement, Park made it clear she still viewed Pyongyang as a serious threat and would put the South’s national security before any trust-building programme.