Despite the global tension over North Korea's nuclear issue, inter-Korean trade is expected to increase this year on the back of the smooth development of an industrial complex in the Northern border city of Gaesong.

The Korea International Trade Association (KITA) said on Thursday that trade between the two Koreas surged 34.7 percent from the same period a year ago to reach 49.42 million dollars in January.

According to the trade body, the South exported 22.64 million dollars worth of goods to the North, up 41.9 percent, and its imports were valued at 26.78 million dollars, up 29.2 percent.

A KITA official said that despite the recent standoff surrounding the North's nuclear weapons project, the development of the Gaesong Industrial Complex has been carried out steadily and smoothly, with a resulting increase in the exchange of goods between the South and the North.

In 2004, inter-Korean trade had dropped 3.8 percent from the previous year to 697 million dollars.