North Korea's Economy Shows No Serious Signs of Border Closure... Holding Up Well

Hong Jehwan, Research Fellow at the Institute for Unification Studies
"This Year's Food Situation Cannot Be Seen as Particularly Deteriorated"

On September 5 last year, a North Korean man wearing a mask and holding a baby was seen walking in the Jangmadang (market) in Hyesan City, Yanggang Province, North Korea. Photo taken in Changbai Korean Autonomous County, Jilin Province, China. (Image source=Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] Although the North Korean economy is facing difficulties due to border closures caused by the COVID-19 pandemic, an analysis suggests that there are no signs of a severe crisis yet, and the situation is still at a "bearable level."

Hong Jehwan, a research fellow at the Korea Institute for National Unification, evaluated in a research report published on the 31st in the Korea Development Institute (KDI) North Korean Economic Review that "while the North Korean economy is undoubtedly struggling, the decrease in imports due to border closures is not causing instability throughout the economy."

He analyzed, "North Korea's food production last year was at or likely below the average level," adding, "North Korea has continuously been in a state of food shortage, and this year’s food situation does not appear to have worsened significantly compared to previous years." He further stated, "Whether there is a change in the scale of North Korea-China trade during the COVID-19 phase could be an important indicator for assessing the North Korean economy," and argued, "The fact that North Korea has not significantly increased trade volume with China until recently indicates that the North Korean economy is still in a bearable state."

However, it was judged that the sharp decline in imports of intermediate and consumer goods due to border closures is clearly having an adverse effect on certain industrial sectors and the lives of North Korean residents. Research fellow Hong said, "The sharp decline in imports of industrial materials and parts for capital goods due to COVID-19 is problematic," adding, "This inevitably directly affects production in industries highly dependent on imported intermediate or capital goods, and as a result, industrial production, especially in the manufacturing sector, is likely decreasing."

As a representative example, Hong introduced the case of the Namheung Youth Chemical Combined Enterprise fertilizer factory, which had to replace high-pressure valves and high-pressure injectors used in the coal gasification process in December last year but was unable to procure imported parts, resulting in production being halted for more than a week. He added, "In the Kim Jong-un era, consumer goods imports have increased significantly, but last year, the scale of consumer goods imports returned to levels much earlier than 2010," and "This is likely worsening the consumption living standards of residents who have become highly dependent on imported goods."

This content was produced with the assistance of AI translation services.