"North Korea Likely to Endure Sanctions and COVID-19 Somehow... Different from the 1990s"

[Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] It is forecasted that North Korea's economy will be able to endure to some extent despite strengthened sanctions and lockdowns due to COVID-19, and that it will not change its policy stance for the time being.

Choi Ji-young, a research fellow at the Korea Institute for National Unification, and Choi Eun-joo, a research fellow at the Sejong Institute, stated this at an expert briefing held on the 22nd at the Lotte Hotel in Seoul for reporters covering the Ministry of Unification.

Research fellow Choi Eun-joo said, "It is predictable that North Korea will face difficulties if imports are cut off for a long time, but it is difficult to judge whether North Korea will change its policy stance because of this."

In order for North Korea to change its economic policy stance, it would have to reach the level of the 1990s food crisis, but given the current economic foundation, it is unlikely that a situation similar to the 1990s will occur.

Research fellow Choi Ji-young also diagnosed the situation as different, saying, "The economic crisis in the 1990s was caused by a significant decrease in the supply of oil and fertilizer compared to the early 1990s, which led to deterioration in manufacturing and agriculture," and "Although imports have greatly decreased now, oil is still being imported, and a considerable amount of fertilizer is also being imported."

He said, "Because oil and fertilizer imports are continuing despite sanctions and the COVID-19 situation, the shock is not severe enough to collapse the entire industry," adding, "The economy will deteriorate, but the possibility of a crisis is low."

It was analyzed that during Kim Jong-un's 10 years in power, the negative impact on people's livelihoods was more severe from COVID-19 than from sanctions. While the impact of sanctions was concentrated on mining and heavy industry, the sectors closely related to people's livelihoods such as agriculture, forestry, fisheries, light industry, and services were relatively less affected, whereas the shock from COVID-19 affected all industries.

Research fellow Choi Ji-young explained, "Until 2019, when COVID-19 had not spread, exports plummeted by 90%, but imports maintained about 70% of previous levels. However, with the border closures due to the COVID-19 shock in 2020, imports sharply declined," adding, "The growth rates of agriculture, forestry, fisheries, and other service sectors, which were favorable until 2019, also fell."

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