[Global NK Commentary] Does North Korea's Recent Sustained Positive Economic Growth Mean an Improvement in the Livelihoods of its Citizens?

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1. Background

According to the Bank of Korea's "Estimate of North Korea's Economic Growth Rate for 2024" published in August 2025, North Korea's economy is estimated to have grown by 3.7% in 2024 compared to the previous year.[1] This is the highest growth rate since 3.8% in 2005 and marks two consecutive years of positive growth following 3.1% last year. Setting North Korea's GDP in 2019, just before the COVID-19 pandemic, at 100, and applying the Bank of Korea's annual growth rates, the figure for 2024 reaches 101.8, appearing to surpass pre-pandemic levels (see <Figure 1>).

<Figure 1> North Korea's Growth Rate (Right Axis) and GDP Trend (2019=100, Left Axis) Since the COVID-19 Pandemic

Source: Bank of Korea

So, has the livelihood of North Korean citizens also recovered to pre-COVID levels, as the GDP trend suggests? Examining recent market price trends and the North Korean authorities' policy directions raises the possibility that livelihoods have actually worsened. Therefore, this article aims to analyze changes in the livelihood situation of North Korean citizens, focusing on market indicators such as exchange rates and grain prices, and the strengthening of centralized control that has continued since COVID-19.

2. Surge in Market Prices

First, let's examine market prices, which are most closely related to people's livelihoods. The current price trend in North Korea is better described as a 'surge' rather than simply 'increase.' The North Korean Won/US Dollar market exchange rate, which directly affects import prices, recorded 38,861 Won as of August 2025. The price of rice, a key indicator of market prices, exceeded 20,000 Won, reaching 20,961 Won (see <Figure 2>). This level represents a surge not seen in nearly 10 years since market prices began to stabilize after the currency reform failure in 2009. Considering that the Won/Dollar exchange rate remained in the 8,000 Won range and rice prices were around 5,000 Won during the price stabilization period, the current level is more than four times the long-term average.

<Figure 2> North Korean Market Exchange Rate (Won/Dollar) and Rice Price Trends Since 2019

Source: DailyNK "North Korean Market Trends"

The North Korean authorities' policies appear to have significantly influenced the background of this price increase. Lim Soo-ho (2025) identified the ban on foreign currency use in April 2024 and the resulting distrust in the government's foreign exchange policies as major causes.[2] Choi Ji-young (2024) cited the amendments to the Financial Law, Electronic Payment Law, and Central Bank Law, as well as measures to strengthen state control over currency circulation, taken by North Korean authorities since 2000 to absorb privately held foreign currency as the background.[3] Meanwhile, although not verifiable through data, the possibility of currency evaporation is also raised. According to reports from AsiaPress, RFA, and others, monthly wages for workers in key industrial sectors in North Korea reportedly increased by 10 to 40 times from the end of 2023.[4] If the increased wages were paid through currency issuance without sufficient government funds, it is possible that a rapid inflation occurred due to an increase in the money supply. Regardless of the cause, the steep rise in prices is increasing the burden on citizens' livelihoods and leading to a worsening of their living conditions.

3. Strengthening of Centralized Control over the Economy

Another factor burdening citizens' livelihoods, along with rising prices, is the North Korean authorities' strengthening of centralized control over the entire economy. Following the failure of the Hanoi North Korea-U.S. summit in 2019 and the COVID-19 pandemic from 2020 onwards, the North Korean authorities' policy direction has shifted from expanding market autonomy to strengthening state-led control. In particular, distribution sectors such as grain distribution and sales of manufactured goods have become primary targets of control. In the grain sector, the "Grain Management Law" was amended three times in 2020, 2021, and 2022, legally codifying the state's right to sell grain. As a follow-up measure, the sale of grain in markets was prohibited, and sales were permitted only at state-operated grain distribution centers. Similarly, the "Socialist Commerce Law," amended in 2021, expanded the state's sales functions. According to testimonies from North Korean defectors and media reports, since this period, policies have been implemented to restrict market operating hours and sales items, while guiding the distribution of manufactured goods from markets to state-owned stores. Considering that a large portion of the population relies on market activities for their livelihood, these policies can pose a direct threat to their means of survival.[5] For example, if grain sales are prohibited, not only grain vendors but also related livelihood activities, including transportation or processing (making and selling rice cakes, alcohol, etc.), are likely to shrink. Furthermore, it can lead to inefficiencies in grain distribution, exacerbating the price increases explained in the previous section. Meanwhile, grain distribution centers and state-owned stores are often operated by individuals who lease them from the state. Consequently, while those politically connected to state agencies or possessing a certain level of capital may increase their income, individual merchants who paid rent to operate in the market may see their incomes decrease. As a result, this structure is likely to lead to a reduction in market-based livelihoods and an expansion of income disparity.

4. Potential Change in the Relationship Between Economic Growth and Livelihoods

Recent trends in North Korea's economy suggest a potential change in the relationship between economic growth and the livelihood economy. In the early 2000s, when marketization was expanding, economic growth and the living standards of citizens moved in the same direction, and in some cases, improvements in living standards may have been more pronounced than growth rates. This is because the Bank of Korea's estimates are primarily based on production in the formal economy, and production in the informal economy is difficult to capture. For example, according to the Ministry of Unification's "Report on Perceptions of North Korea's Economic and Social Conditions," based on a survey of 6,351 North Korean defectors, the proportion of respondents who reported eating three meals a day increased by more than 30 percentage points, from 56.3% before 2011 to 89.7% after 2012.[6] However, there is a possibility that this relationship has weakened recently. Examining the Bank of Korea's 2024 economic growth rate estimates by industry, the sectors with significant growth were heavy industry (10.7%) and construction (12.3%). Heavy industry appears to reflect increased demand for military supplies due to the Russia-Ukraine war, while the construction sector is prioritized by the North Korean authorities for policy reasons, such as rural housing construction. In contrast, light industry (-0.7%) and agriculture, forestry, and fisheries (-1.9%), which are closely related to people's livelihoods, showed negative growth. Even if there is an increase in production or foreign currency income due to war or other factors, the benefits are more likely to accrue to the North Korean authorities than to the citizens. The recent pattern of foreign currency inflows is no different. For instance, profits from virtual asset hacking only expand the regime's foreign currency resources and are unlikely to lead to improvements in people's livelihoods.[7] In summary, both war-related booms and virtual asset hacking income are likely to result in increased revenue for the regime rather than improvements in people's livelihoods.

In conclusion, despite North Korea's recent positive growth, it is highly probable that the livelihood economy of North Korean citizens has not yet recovered to pre-COVID-19 levels. North Korea's centralization policies can be interpreted as an attempt to maximize the absorption of state resources in response to economic uncertainties caused by international sanctions and COVID-19. While this approach may lead to the restoration of government control or some policy achievements in the short term, the North Korean authorities should be aware that in the long term, side effects such as economic inefficiency and a decline in the livelihood economy may become more pronounced.

5. Policy Implications

Even if North Korea's livelihood economy is struggling, the possibility of inter-Korean cooperation linked to it being pursued in the short term is currently low. During the COVID-19 border closure, North Korea rejected our government's proposals for medical and livelihood assistance, and in a recent statement on July 28th, Vice Department Director Kim Yo Jong of the Workers' Party of Korea stated that there was "nothing to discuss with South Korea," expressing a negative stance on resuming inter-Korean dialogue. Therefore, at this stage, our government needs to prioritize support through international organizations for the improvement of North Korea's livelihoods, rather than direct cooperation with North Korea. According to statistics from the United Nations Office for the Coordination of Humanitarian Affairs (UN OCHA) Financial Tracking Service (FTS), the amount of aid provided to North Korea in 2024 was $2.8 million, a decrease of more than 90% compared to $45.9 million in 2019, before the COVID-19 pandemic. The donor countries are limited to Nordic countries such as Switzerland, Sweden, and Norway. Therefore, our government needs to actively support the activities of international organizations and NGOs, which have resumed since the border blockade was lifted. Meanwhile, in the long term, considering potential changes in North Korea's stance, it is necessary to express a continued willingness to cooperate in livelihood areas. However, an approach that rushes for visible 'achievements' such as high-level talks should be avoided. Giving the impression of being 'led by North Korea' could provoke backlash from public opinion regarding humanitarian aid. ■

[1] Bank of Korea. (2025). Estimate of North Korea's Economic Growth Rate for 2024. https://www.bok.or.kr/portal/...201264

[2] Lim Soo-ho. (2025). Background and Implications of the Recent Resurgence of Exchange Rates and Prices in North Korean Markets. Institute for National Security Strategy. https://www.inss.re.kr/...41037505&bbsId=ib

[3] Choi Ji-young. (2024). "North Korea's State Control Strengthening Policy and Changes in Market Indicators," Online Series CO 24-68, Korea Institute for National Unification. https://www.kinu.or.kr/...=127918

[4] AsiaPress. (2024, January 5). <Inside North Korea> A Shocking "Wage Increase" of Over 10 Times (1) Wages for state-owned enterprise and public officials uniformly raised... still around 4,500 Won per month. https://www.asiapress.org/korean/2024/01/nk-economys/wage-increase/, RFA. (2024, January 9). North Korea Simultaneously Raises Worker Wages and Food Ration Prices on a Trial Basis. https://www.rfa.org/...01092024091414.html, RFA. (2024, April 29). North Korea Fully Implements 20-Fold Wage Increase for Factory and Enterprise Workers. https://www.rfa.org/korean/...04292024095034.html

[5] According to a survey conducted by CSIS (Center for Strategic and International Studies) among residents actually living in North Korea, the proportion of market income in North Korean household income is reported to be at least 75%. CSIS. (2024). Paradise evaporated: Escaping the no-income trap in North Korea. https://beyondparallel.csis.org/paradise-evaporated-escaping-no-income-trap-north-korea/

[6] Ministry of Unification. (2024). Report on Perceptions of North Korea's Economic and Social Conditions. https://unikorea.go.kr/...47387&pageIdx=1

[7] According to the report of the Panel of Experts of the UN Security Council Committee established pursuant to resolution 1718 (2006), North Korea is estimated to have stolen over $3 billion through cryptocurrency hacking from 2017 to 2023. United Nations Security Council. (2024). Final report of the Panel of Experts submitted pursuant to resolution 2680 (2023) (S/2024/215). https://undocs.org/...DeviceType=Desktop

■ Jeong Seung-ho_Professor, Department of Northeast Asian International Trade and Logistics, Incheon National University.

■ Edited and Compiled by: Oh In-hwan_Senior Fellow, EAI; Jeong Jong-hyuk_Research Fellow, Korea National Diplomatic Academy

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