Why North Korea Is Getting Richer — and What It Might Mean

Three Years of Shrinking Economy

North Korea's economy contracted—meaning it got smaller—for three years in a row. In 2020, the economy shrank 4.5%. In 2021, it shrank 0.1%. In 2022, it shrank 0.2%. Reuters

This happened because North Korea closed its borders almost completely to stop COVID-19 from entering the country. On top of that, international sanctions—financial penalties meant to pressure North Korea's government—were already limiting how much money could flow in from trade.

By mid-2021, North Korea's leader Kim Jong Un admitted the country faced a "tense" food situation. He blamed it on both the pandemic and typhoon damage from 2020. Yet he also claimed the country had grown industrial output by 25% in the first half of 2021 compared to 2020. Even if that number was true, it meant recovery from a very weak starting point. Reuters

By October 2021, Kim stopped talking optimistically. He called the economic situation "grim" and told his officials to focus on improving people's daily lives. In North Korea's political system, this kind of blunt language signals real trouble—not just casual talk. Reuters In 2022, he said the country was facing "a great struggle for life."

What the Pandemic Actually Did to the Economy

Beyond just shrinking the numbers, the pandemic changed how North Korea's economy functioned. When the government locked down the borders to prevent the virus, it also cracked down on informal markets—the jangmadang—that ordinary North Koreans had been using since the 1990s to buy and sell goods.

Since the early 1990s, when famine hit the country, North Koreans had quietly built a parallel economy outside official state control. Markets formed, traders appeared, money circulated in ways the government didn't directly manage. For three decades, the state tolerated this because it helped people survive when official rations fell short.

The pandemic gave the government an excuse to tighten control over these markets in the name of disease prevention. What this actually meant was reasserting state control over the flow of goods and money—something the government had never been fully comfortable with. The informal economy had always been a pressure valve, but the pandemic allowed the state to cinch it tighter.

A New Partnership with Russia Changes Everything

In September 2023, North Korea's Kim Jong Un met with Russia's Vladimir Putin in the Russian Far East. They met again in June 2024 in Pyongyang. Congressional Research Service

This wasn't just a diplomatic visit. They signed a Comprehensive Strategic Partnership treaty—a formal agreement that went far beyond buying and selling weapons. It created a framework for deep cooperation in security and economics.

What followed was concrete. North Korea sent weapons and missiles to Russia to help it fight in Ukraine. North Korean soldiers were deployed to fight directly alongside Russian forces. Congressional Research Service In return, something crucial happened: Russia stopped enforcing the international sanctions that had been strangling North Korea's economy.

Russia sits on the UN Security Council, which means it can block sanctions. Before 2023, Russia had reluctantly gone along with sanctions against North Korea. After 2023, it actively blocked attempts to renew those sanctions and stopped enforcing them. 38 North For North Korea, this opened a window: hard currency started flowing in again, technology became accessible, and the political signal was clear—other countries might now feel comfortable trading with North Korea again.

Think of it like a pressure valve opening. The sanctions had sealed off most of the world's trade routes to North Korea. Russia cracking those sanctions open didn't create free access everywhere, but it did create one major channel for money, energy, and technology to flow in.

The Economy Bounces Back

In 2023, something shifted. After three years of contraction, North Korea's economy grew again. Reuters The timing matters: this growth came right as Russia was becoming a major economic partner.

Did Russia cause the growth? Not entirely. North Korea also partially reopened its border with China in 2023, allowing trade to resume after the pandemic freeze. But Russia brought something different—direct payments through arms transfers, supplies of energy and technology that China wasn't providing at the same scale, and new work opportunities as North Korean workers returned to jobs in Russia.

A Growth That Might Not Reach Everyone

By December 2024, Kim Jong Un was publicly pushing for stronger rural economies. Reuters

This is a signal worth paying attention to. The overall economy grew in 2023, but that growth didn't spread evenly. The wealthy parts of Pyongyang—where the government and the merchant class live—absorbed most of the gains. The countryside, which depends on the state to distribute grain and relies on farming, typically gets less of any economic gains and bears more of the pain when the country tightens its belt.

We have seen this pattern in North Korea before. In 2002, the government tried to let markets function more freely. For a few years, the economy improved. But by 2005 and 2006, the problems returned. The government had tried to capture the benefits of economic opening while keeping tight control to prevent political challenges to its power. Because the state has such strong tools of control in North Korea, each cycle of tightening and loosening happens faster and more abruptly than in other countries.

The real question now is whether the money flowing in from Russia will actually reach rural areas and improve ordinary people's lives, or whether it will mainly support the military and enrich those already close to power. Kim's recent focus on rural economies suggests he recognizes this problem. But recognizing a problem and solving it are different things, especially in a system built on concentrated control.

What This Means for the World's Approach to North Korea

One more thing matters here: the international sanctions system itself is breaking down. Those sanctions depended on all five permanent members of the UN Security Council—the United States, China, Russia, Britain, and France—agreeing to maintain them. Russia's shift has changed that. China, which had always been reluctant to fully enforce sanctions, now has less reason to try.

The practical result is that North Korea is entering the rest of the 2020s with more economic breathing room than it has had since 2017, when the United States and North Korea were closest to military conflict. At the same time, North Korea's military capabilities have not shrunk—if anything, they have grown.

The test ahead is whether the new external money actually improves the lives of ordinary North Koreans, particularly those in rural areas who have borne the heaviest cost of sanctions and pandemic closures. The answer will shape whether North Korea remains stable internally and how it calculates its interests against its neighbors and the world. Aggregate economic numbers alone won't tell that story.