North Korea: Economic Outline

Economic Indicators

North Korea is one of the world's least open countries. The government mainly administers a system of centralized planning and state control of the economy, but has carried out a few market reforms, such as granting greater managerial autonomy to state enterprises and agricultural cooperatives, which would allow them to reinvest profits at their discretion should they achieve the objectives of the plan. The impoverished population is heavily dependent on food rations and government housing subsidies. According to the East Asia Forum, in 2023, North Korea witnessed economic regression as state control over the economy intensified, prioritizing political goals over improving living standards. Concurrently, North Korea bolstered ties with Russia, exporting military equipment to support its ally in the Ukraine conflict. Domestically, North Korea heightened its reliance on heavy industries despite their inefficiencies and lack of global competitiveness.

North Korea does not release official statistics on its economy except for an annual budget report. The country's five-year plan approved in January 2021 is aimed at strengthening self-sufficiency and consolidating central power. The agricultural sector accounts for more around 22.5% of GDP and remains largely state-owned. It employs 51.1% of the workforce. Frequent weather-related crop failures (such as the severe drought that hit the country in 2015, which caused a 14% decrease in rice and wheat production of rice) aggravated chronic food shortages caused by ongoing systemic problems, including a lack of arable land, collective farming practices, poor soil quality, insufficient fertilization, and persistent shortages of tractors and fuel. According to data from the CIA, industry accounts for 47.6% of the national GDP, whereas the services sector has a 29.9% share (latest data available).

No effective tax system is in place and the government controls almost every part of the economy, setting production levels for most commodities, and state-owned industries account for nearly all of GDP. Disproportionately high military spending further drains scarce resources. Also, an informal economy has been developing for the last decade and has largely contributed to the country’s fragile economic recovery. It is estimated to represent almost half of the country's GDP (between USD 1 and 3 billion). The United Nations estimates that the nominal GDP per capita in North Korea is among the lowest in the world. Around half of the country's population is estimated to live in extreme poverty and suffers from malnutrition.

Monetary Indicators	2015	2016	2017	2018	2019
North Korean Won (KPW) - Average Annual Exchange Rate For 1 GHS	35.04	32.58	31.03	29.44	n/a

Source: World Bank - Latest available data.

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Latest Update: May 2024