North Korea, one of former President George Bush’s “axis of evil” countries and one of the few remaining Stalinist states, deserves to be re-evaluated given the prospect of a power succession and the changing economic landscape in the region, according to Goldman Sachs.

Apart from the robust military establishment (absorbing at least 20-30% of GDP vs 3% of GDP in South Korea),  Goldman says North Korea has large untapped potential, including rich human capital, abundant mineral resources (valued at around 140 times 2008 GDP) and significant room for productivity gains.

“We project that the GDP of a united Korea in dollar terms could exceed that of France, Germany and possibly Japan in 30-40 years, should the growth potential of North Korea, notably its rich mineral wealth, be realised,” the bank’s economist Goohoon Kwon says in a paper.

“This projection would put the size of a united Korea in 2050 firmly on a par with, or in excess of, that of most G7 countries, except for the U.S.

Readers of Global Investing may be aware that there are investors who are already looking at North Korea’s potential.

Chosun Fund, for instance, targets North Korea’s extractive industries and energy sector.

Finance chiefs from the G20 meeting in London on Friday and Saturday are likely to be in a slightly better — or at least more relieved — mood than they were last time they got together.

The world economy is still in a mess and the financial system is far from running normally. But — and it is a big but at that — fears of global economic collapse have dissipated. This is in no small part as a result of the actions of groups such as the G20 which endorsed coordinated intervention into the marketplace.

So much so, in fact, that much of this weekend’s discussions will touch on the so-called exit strategies that countries will need to get themselves back out of the stumulus and bailout business. With markets in mind, they are likely to be coy about it.

The G20 itself, meanwhile, is taking on a higher and higher profile as a result of both the global crisis and the rise of China, India and others to economic prominence. In a special report, Brown Brothers Harriman says that the G20 will soon eclipse the G7 as the most important economic policy making gathering.

It argues that it is in the G7’s interest to do so because it stops the solidifying of an emerging market bloc and waters down Russia’s role, following the latter’s now permanent presence as part of an extended G8. 

Here’s an unscientific poll about whether the G20 or the G7 now carries more clout. As ever though, your comments welcome on what this weekend’s meeting should achieve.

Five things to think about this week:

EARNINGS DELUGE
-- A heavy U.S. earnings week looms and the European reporting calendar is picking up. While more banks and financials will be reporting (e.g. Bank of America, Bank of New York Mellon, Credit Suisse and a trading update due from Barclays), results will start flowing from a wider range of sectors in both the U.S. and Europe (ranging from Apple and IBM to Glaxo SmithKline, Du Pont, Coca Cola). Health of the broader economy on display.

MACRO SIGNALS
-- The more mixed signals that earnings send, the more investors are likely to look to macro and other indicators as a cross-check of whether the stock market rebound is sustainable and whether the economy is anywhere near an inflexion point. Flash PMIs and Ifo for April will give an early indication of how economic activity was faring as Q2 got underway. Trade data from Japan is also due for release.

FISCAL HELP
 -- The UK budget on April 22 is expected to issue grim forecasts and extend a helping hand to some sectors, such as autos. The fiscal presentation will keep the spotlight on the limited room for budgetary manoeuvre in Britain and elsewhere with past bailouts and support measures leaving tough decisions to be made on public spending, taxes, etc.

G7-IMF
-- The G7 finance ministers' meeting in Washington comes soon after G20 earlier this month and therefore is unlikely to pull any rabbits out of hats. Moreover, there appears to be a less obvious need to spotlight FX given subsiding implied vols for major FX rates and the U.S. Treasury statement that China is not manipulating FX. Markets are looking for followthrough on G20 pledges.

EMERGING OPPORTUNITY
 -- Emerging markets have proved resilient in the earnings season, withstanding occasional down days on major indices and most recently drawing support from nascent signs that the Chinese economy has put its worst quarter behind it. Investors' willingness to look anew at the safer parts of the emerging universe is prompting some sovereigns to use this window of opportunity to launch eurobonds or look into doing so.

Goldman Sachs has long been a keen advocate of the BRICs — Brazil, Russia, India and China – as a new power tool for world growth. Indeed, it is credited with coining the phrase.

In a note, the firm says that even though the group is being hit differently by the global slowdown — Russia suffering most,  India least — a uniform drive from the four will return as soon as the cycle starts to turn.

It is predicting big things as early as next year.  It says China’s economy is already the third largest in the world and it sees it eclipsing current No. 2  Japan as early as 2010. Furthermore, as a group, the four countries are set to be dominant.

“Our long-term projections envisage the BRICs as an aggregate surpassing the G7 by 2035,” it says.

All the G7 countries outside the euro zone now have interest rates of 1 percent or less, prompting some grumbling in various financial quarters that the European Central Bank is being particularly stubborn in keeping its rates at 2 percent.

Now comes an interesting take on this from JPMorgan Asset Management which suggests the gap may have more to do with egg on the face than monetary policy. 

“There is a school of thought,” it writes in a new note “that the ECB has been in a state of denial ever since it decided to raise rates last July.  An organisational behaviourist would observe a desire to preserve ‘face’ in the deliberate way by which the central bank has reversed its previous tightening stance.”

Whether this is the case or not, it does not bode well for European equities or the euro itself, the firm says, arguing that equities are further away from being upgraded than U.S. stocks as one result of the higher rates.  As for the euro , JPMorgan AM says there is plenty of scope for it to be punished.

How well is your finance minister doing as the global economy comes tumbling around your ears? Finns, at least, can hold their heads up with pride: Jyrki Katainen (pictured on ice) has topped The Financial Times’ annual rankings of European finance ministers.

Results for the G7 members of the group were mixed. Germany’s Peer Steinbruck came second, despite a poor showing on politics, and France’s Christine Lagarde was seventh. Britain and Italy languished at 14 and 16, respectively, although at least UK Chancellor of the Exchequer Alistair Darling can boast of coming first in politics. Something to do with élan, apparently.

Stocks are tumbling around the world and Mainstreet is feeling the crunch, but at the Institute of International Finance (IIF) luncheon it was hard to see the dark side past the luxurious chocolate mousse cake and keynote comedy.

Jacob Frenkel, the vice-chairman of American Internal Group (AIG) — yes, that insurer on the receiving end of an $85 billion government bailout a few weeks ago (and now an extra $37.8 billion loan ), gave a light-hearted address on the G7’s plan of action to combat the credit crisis.

Frenkel was quick to take issue with the lack of details in the G7 plan and urged the importance of concrete dates.

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