Despite the international community’s continued economic sanctions against North Korea, its economy has shown signs of overall growth, according to experts and data.

The Bank of Korea in Seoul said North Korea’s economic growth reached a 17-year high of 3.9 percent in 2016. The South Korean central bank has monitored the North Korean economy since 1991. 


The figure is a rebound from 2015, when North Korea posted a negative growth of 1.1 percent mainly due to a severe drought that led to a drastic decrease in grain production.

The North recorded 0.8 percent growth in 2011, 1.3 percent in 2012, 1.1 percent in 2013 and 1 percent in 2014, according to BOK data.

Experts in Seoul attributed the North’s relatively rapid growth last year to a revitalized black market and the increase in trade with China, Pyongyang’s closest ally.

“Kim Jong-un’s move to bring some elements of capitalism including market economy into its socialist economic system has seemingly invigorated North Korea’s economy because it has awoken its people to a new way of life,” Yang Un-chul, vice president of the private Sejong Institute, told The Korea Herald.

“Today, North Korean citizens have a more capitalist mind. They have begun to brainstorm new ideas and think for themselves to generate more personal profit.”

Having taken power after the death of his father and North Korean leader Kim Jong-il in 2011, the junior Kim is said to have been in favor of a more flexible economic system. This has since led to a growth in the North’s private enterprises, according to experts here.

They said the North’s economic reform has also bestowed the business and factory operators more private control over its employees and management. The overall farming trend has also shifted from state-controlled to a more family-owned system. 


Another factor behind the economic growth concerns the North’s trade ties with China, which reportedly account for nearly 90 percent of North Korean trade.

According to data from the state-run Korea Trade-Investment Promotion Agency in Seoul, bilateral trade between Pyongyang and Beijing rose 6.1 percent in 2016 from a year earlier, reaching a two-way total of $6.5 billion.

Notably, China’s export of foreign goods such as chocolate and alcohol to North Korea rose in the first two quarters of this year, which indicates that its economy is not sluggish, said Hong Kong’s South China Morning Post last week.

It said that North Korea imported about 167.9 tons of chocolate worth $398,000 from China during the first quarter of this year, which is 1.8 times more than the same period a year before.

But experts forecast that the North’s economy will be hit hard by the recent set of stronger economic sanctions imposed by the UN Security Council, which targets its textile exports. In 2016 alone, textiles were the North’s second-biggest export item worth $752 million, after coal and other minerals.

“Its economy is likely to face more difficult challenges this year due to its latest series of nuclear and missile tests,” Yang added.

Lee Woo-young, a professor at the University of North Korean Studies said it was the country’s poor who would be worst hit.

“But the ruling class and the rich people in the North won’t be much affected because they will always find ways to maintain their living standard. The underprivileged people are always the unlucky ones.” he said.

By Jung Min-kyung (mkjung@heraldcorp.com)