The North Korean economy has returned to growth in 2023, emerging from a three-year recession, Seoul said on Friday. According to the South Korean central bank (BOK), North Korea’s GDP grew by 3.1% last year.
North Korea has had a string of years of recession with a GDP down 0.2% in 2022, 0.1% a year earlier and above all a collapse of 4.5% in 2020, due to the Covid 19 pandemic. The icing on the cake for Kim Jong-un is that the country is said to have achieved its best performance since 2016 last year.
Agriculture still lagging behind
The recovery of the North Korean economy would affect all branches of activity, according to the BOK, which publishes each year these estimates which are considered the most reliable on the economic health of Pyongyang. The North Korean regime does not publish official data.
According to figures released by Seoul, manufacturing output grew by 4.9%, its fastest pace in seven years. This performance was made possible by, in particular, the production of metal products and wigs. The service sector also grew by 1.7% last year, faster than the 1.0% increase the year before. Construction is also doing better as Kim Jong-un regularly takes centre stage at the inauguration of new real estate complexes: activity jumped by 8.2% (2.2% a year earlier) thanks in particular to the construction of residential buildings.
As for the agricultural sector, although it is lagging behind, it has also seen a spectacular recovery with an increase of 1%, far from the 2.1% fall recorded in 2022.
North Korean exports more than double
The improvement is also noticeable in the foreign trade of the hermit country, which remains hit by UN sanctions. Pyongyang’s exports more than doubled to reach $330 million in 2023 while imports increased by 71% to reach $2.44 billion. In detail, Pyongyang would have mainly sold shoes, hats and bags and bought primarily fertilizers and plastic products.
According to BOK national accounts officials, this increase in trade is largely due to the easing, in early 2023, of cross-border restrictions that had been put in place with Covid. “Although economic sanctions against North Korea continue, Covid-19-related controls have been relaxed and foreign trade with China has increased,” they said in presenting these results. Because at the same time, inter-Korean trade has fallen to zero.
However, the improvement in North Korea’s foreign trade situation should be put into perspective. While it has almost returned to the level it was at before the pandemic, it is still a long way from what it was at the beginning of the 2010s.
A rebound that risks being temporary
Overall, the situation in North Korea remains very fragile. “Most experts believe that the 2023 rebound is temporary,” the BOK emphasizes. On the one hand, the situation in the agricultural sector remains fragile, as the recent visit by the FAO Director-General seems to show. But also the recent statements by Kim Jong-un emphasizing that the failure to provide the population with basic necessities, including food, constituted a “serious political problem.”
On the other hand, Seoul admits, it is still difficult to anticipate the impact that a greater proximity of the North Korean regime with Moscow could have, while last year, Pyongyang’s main partner remained Beijing, which accounted for 93% of trade. “North Korea may obtain things in exchange for the provision of military supplies to Russia,” explains the BOK, evoking the possibility of seeing Moscow carry out technology transfers in the fields of defense and aviation. But also by promoting tourism between the two countries and by resorting more to North Korean labor, a traditional source of foreign currency for Pyongyang.