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Economic Indicators

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North Korea is one of the world's least open countries. The government mainly administers a system of centralised 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 Bank of Korea (BOK of South Korea), North Korea's economy grew for the first time in three years in 2019 as better weather conditions boosted harvests, but sanctions imposed to stop its nuclear ambitions (in place since 2006) kept manufacturing weak. According to the BOK, GDP in North Korea rose 0.4% in real terms in 2019 compared to 2018, when the economy contracted the most in 21 years, shrinking 4.1% due to a drought and sanctions. However, North Korea's economy shrank by 4.5% in 2020, suffering its biggest contraction since at 1997, amid continued UN sanctions, COVID-19 lockdown measures and worsened weather conditions such as heavy rains and typhoons (Bank of Korea, 2021). According to Coface, North Korea's GDP growth was -4% in 2021. The economy is expected to recover gradually in 2022 on the back of trade as borders with China, the almost unique trade partner, reopened in September 2021. Trade surged and doubled between both economies in September 2021. Nevertheless, risks of coronavirus variant outbreaks in China may trigger renewed border closures in order to prevent spreading (Coface, 2022).

North Korea does not release official statistics on its economy except for an annual budget report. The country's new five-year plan approved in January 2021 is aimed at strengthening self-sufficiency and consolidating central power. The agricultural sector accounts for more than 20% 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 on-going systemic problems, including a lack of arable land, collective farming practises, poor soil quality, insufficient fertilisation, and persistent shortages of tractors and fuel.

According to data from the Bank of Korea, mining still accounts for 10% of GDP, although this is a declining trend, as a Chinese ban on coal imports from North Korea continued to weigh on the industry. The weapons production-oriented industrial sector is a major economic driver and the service sector is gaining momentum. In 2019 it accounted for 34% of GDP, five points more than in 2012, although most of the sector's strength is due to state-related services, which account for 74% of the sector's value added.

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, ranking it 180th out of 193 countries.

Around half of the country's population is estimated to live in extreme poverty and suffers from malnutrition. Food shortages worsened after the crop harvest hit its worst in 10 years in 2018. The country receives aid from the World Food Programme (WFP).

 

 
Monetary Indicators 20152016201720182019
North Korean Won (KPW) - Average Annual Exchange Rate For 1 GHS 35.0432.5831.0329.44n/a

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 43.8 12.7 43.5

Source: World Bank - Latest available data.

 

The Active Population in Figures

201820192020
Labour Force 16,471,50216,567,35616,371,651

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 86.50%86.45%86.24%
Men activity rate 91.51%91.56%91.41%
Women activity rate 81.46%81.31%81.05%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
5,2/100
World Rank:
178
Regional Rank:
40

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Not Free
Political Freedom:
7/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
179/180

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Sources of General Economic Information

Main Online Newspapers and Portals
BBC Country Profile, North Korea
38 North
NK News
Useful Resources
Official webpage of North Korea
Official website of the government of North Korea
Central Bank of the Democratic People's Republic of Korea
 
 

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Latest Update: October 2022