[Global NK Commentary] Does the Recent Sustained Positive Growth of the North Korean Economy Mean the Recovery of the Livelihoods of North Korean Residents?

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1. Background

According to the Bank of Korea's "Estimates 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. If we set North Korea's GDP in 2019, the year before the COVID-19 pandemic, at 100, and apply the Bank of Korea's annual growth rates, it appears to have surpassed pre-pandemic levels, reaching 101.8 in 2024 (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, have the livelihoods of North Korean residents recovered to pre-COVID levels, as the GDP trend suggests? Examining recent market price trends and the North Korean authorities' policy directions suggests that livelihoods may have actually worsened. Therefore, this article aims to analyze the changes in the livelihood conditions of North Korean residents, focusing on North Korea's market indicators such as exchange rates and grain prices, as well as the centralized control policies that have continued since COVID-19.

2. Surge in Market Prices

The first thing to examine is market prices, which are most closely related to people's livelihoods. The current trend of prices 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 representative 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 failed currency reform of 2009. Considering that during the price stabilization period, the Won/Dollar exchange rate remained around 8,000 won and the price of rice around 5,000 won, the current level is more than four times the long-term average.

<Figure 2> North Korean Market Exchange Rate (KRW/USD) 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 policy as major causes.[2] Choi Ji-young (2024) cited the amendments to the fiscal law, electronic payment law, and central bank law, as well as measures to strengthen state control over currency circulation, adopted by the North Korean authorities since 2000 to absorb foreign currency held by the private sector, 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 major industrial sectors in North Korea have reportedly increased by 10 to 40 times since late 2023.[4] If the increased wages were paid through currency issuance without sufficient government funds, a rapid inflation could have occurred due to the increase in the money supply. Regardless of the cause, the sharp rise in prices is increasing the burden on residents' livelihoods and leading to a worsening of their living conditions.

3. Strengthening of Centralized Control over the Economy

Along with the rise in prices, another factor burdening residents' livelihoods is the North Korean authorities' strengthening of centralized control over the entire economy. Following the failure of the Hanoi North Korea-US summit in 2019 and the COVID-19 pandemic from 2020 onwards, the North Korean authorities' policy stance has shifted from expanding market autonomy to strengthening state-led control. Distribution sectors, such as grain distribution and sales of manufactured goods, are becoming major targets of control. In the grain sector, the "Grain Management Law" was revised 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" revised in 2021 expanded the state's sales functions. According to testimonies from defectors and media reports, since this period, policies have reportedly been implemented to limit market operating hours and sales items, while guiding the distribution of manufactured goods from markets to state-run stores.[5] If, for example, grain sales are prohibited, not only grain sellers but also related livelihood activities, including transportation and processing (making and selling rice cakes, alcohol, etc.), will be curtailed. This could also lead to inefficiencies in grain distribution, exacerbating the price increases explained in the previous section. Meanwhile, in most cases, grain distribution centers and state-run stores are operated by individuals who have leased 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 previously paid market fees to conduct business may see their incomes decrease. In the end, this structure is likely to lead to a reduction in market-based livelihoods and an expansion of income disparities.

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

The recent trends in North Korea's economy suggest a potential change in the relationship between economic growth and the livelihoods of its people. During the period of expanding marketization in the early 2000s, economic growth and residents' living standards moved in the same direction, and in some cases, improvements in living standards may have been more pronounced than growth rates. This is because Bank of Korea 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 ate 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 is likely a reflection of increased demand for military supplies due to the Russia-Ukraine war, and construction is because the North Korean authorities prioritize areas like rural housing construction. In contrast, light industry (-0.7%) and agriculture, forestry, and fisheries (-1.9%), which are directly related to people's livelihoods, showed negative growth. Even with increased production or foreign exchange earnings due to war or other factors, the benefits are more likely to accrue to the North Korean authorities than to the residents. The pattern is similar when looking at recent foreign exchange inflows. For instance, profits from virtual asset hacking only increase the regime's foreign exchange 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 improved livelihoods.

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

5. Policy Implications

Even if North Korea's economy is struggling, the possibility of North-South cooperation based on this situation is currently unlikely in the short term. During the COVID-19 border lockdown, North Korea rejected our government's proposals for medical and livelihood support, and in a recent statement on July 28, Kim Yo Jong, Vice Department Director of the Workers' Party of Korea, stated that there are "no issues to discuss sitting down with South Korea," indicating a negative stance on resuming inter-Korean dialogue. Therefore, at this stage, the South Korean government should prioritize support through international organizations rather than direct cooperation with North Korea for the improvement of livelihoods in North Korea. According to statistics from the UN 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, it is necessary for our government to actively support the activities of international organizations and NGOs that have resumed since the border closure was lifted. Meanwhile, in the long term, it is necessary to express our continued willingness to cooperate in livelihood areas, keeping in mind potential changes in North Korea's stance. However, we should avoid approaches that rush for tangible "achievements" such as high-level talks. Giving the impression of being 'dragged along by North Korea' could provoke domestic public backlash against humanitarian aid. ■

[1] Bank of Korea. (2025). Estimates 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 Resurge in North Korean Market Exchange Rates and Prices. Institute for National Security Strategy. https://www.inss.re.kr/...41037505&bbsId=ib

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

[4] AsiaPress. (January 5, 2024). "Inside North Korea: An Unprecedented Wage Increase of Over 10 Times" (1) Wages for state-owned enterprise employees and public officials raised uniformly... still around 4,500 won per month. https://www.asiapress.org/korean/2024/01/nk-economys/wage-increase/, RFA. (January 9, 2024). North Korea Implements Simultaneous Trial Increases in Workers' Wages and Food Ration Prices. https://www.rfa.org/...01092024091414.html, RFA. (April 29, 2024). North Korea Fully Implements 20-Fold Wage Increase for Factory and Enterprise Workers. https://www.rfa.org/korean/...04292024095034.html

[5] A survey conducted by CSIS (Center for Strategic and International Studies) targeting residents actually living in North Korea reported that market income accounts for at least 75% of household income in North Korea. 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 final report of the Panel of Experts submitted pursuant to UN Security Council Resolution 2680 (2023), North Korea is estimated to have stolen more than $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.

■ Editor and Compiler: Oh In-hwan_Senior Fellow, EAI; Jeong Jong-hyuk_Research Fellow, Korea National Diplomatic Academy

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