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North Korea has significantly increased its foreign exchange due to arms sales to Russia, exports of rare metals, and hacker activities, which have brought prosperity to Pyongyang. However, currency devaluation, inflation and institutional weakness have also increased simultaneously.
According to the Bank of Korea’s assessment on July 31,north korea Real gross domestic product (GDP) will grow by 3.5% in 2025, the third consecutive year of growth. Russia-Ukraine war profits from arms sales, rare metals exports and theftcryptocurrency But it has also raised hidden concerns such as North Korea’s currency devaluation and rising prices.
The Wall Street Journal reported on June 7 that North Korea today is a far cry from the past, especially in the capital where the elite are concentrated.Pyongyang Why. Diners scan QR codes with their mobile phones to pay, and Chinese-made electric cars drive through the streets. Last year alone, Pyongyang built 10,000 new homes, more than Los Angeles or Chicago.
A Russia-Ukraine war breaking out in 2022 would make Russia a major financial sponsor of North Korea. As Russia ran out of ammunition and turned to Pyongyang for Soviet-era artillery shells, North Korea was able to convert its stockpiles into cash, food aid and advanced military technology.
Bloomberg Economics analyzed on August 6 that North Korea’s foreign earnings could reach a maximum of US$22 billion from 2022 to 2025, nearly four times that of the previous four years. Bloomberg, citing the Center for Strategic and International Studies (CSIS), estimated that the highest revenue from Russia was about US$14.02 billion, which included US$9.12 billion in ammunition, US$2.38 billion in heavy artillery, US$1.27 billion in ballistic missiles, US$849 million in military dispatches and US$403 million in others.
“North Korea is stronger now than at any time in the last 35 years,” said Lankov, a professor at South Korea’s Kookmin University. He described arms sales to Russia as “winning the lottery” and regaining Beijing’s support as a reliable pension.
Data released by China Customs on July 21 showed that the trade volume between China and North Korea in the first half of this year reached US$1.5 billion, an annual increase of 19.6%, a new high since the comprehensive UN sanctions in 2017; North Korea’s exports to China increased by 54.1%, with the largest proportion being tungsten used in weapons and semiconductors.
However, North Korea’s trade deficit with China also reached US$850 million, an annual increase of 2.2%. The Korea Herald reported on July 20 that Beijing had imposed export controls on tungsten last year, and that the rise in tungsten prices had given North Korea a windfall.
Hacking is another source of income. Blockchain analytics company TRM Labs reported on April 30 that North Korean hackers stole $577 million in the first four months of this year, accounting for 76% of global cryptocurrency hacking thefts, excluding unexposed cases.
There are worries hidden behind prosperity. Brown, a researcher at the Korea Economic Institute (KEI) in the United States, reported in October last year that the North Korean won was known for its stable exchange rate during the eight years before Kim Jong-un came to power. Now with rising inflation and expanding dollarization, it has depreciated by more than half in a year. It is also difficult to bring market-oriented people back into the socialist system faster than the new law.
Chronic trade deficits, opaque arms sales and hacking revenues, and flows of foreign currency into private pockets have weakened state control over the economy.
Brown believes that behind the bustling streets of Pyongyang lies a regime that is politically flexible but economically weak.
On July 14, Australia’s Roy Institute for International Policy review forum published an analysis by North Korea expert Bernal, suggesting that the question is not whether North Korea is richer, but rather what the wealth represents. North Korea’s recent income has depended mostly on external relations and special geopolitical situations rather than domestic productivity, and a large portion of it can be channeled into military modernization. Whether Pyongyang enjoys a temporary windfall or builds a resilient economy that can withstand shocks will determine whether this wave of growth can be sustained.
