How North Korea Rebuilt Its Economy After the Pandemic — and What It Means for Its People

A Shrinking Economy and a "Grim" Situation

North Korea's economy contracted for three straight years starting in 2020. GDP fell 4.5% in 2020, then shrank again by 0.1% in 2021 and 0.2% in 2022. Reuters The main culprit was the near-total border closure the government imposed to prevent COVID-19 from spreading. On top of that, international sanctions — penalties imposed by the United Nations that restrict trade and financial dealings — were already cutting off hard currency (cash from foreign countries) that the regime depended on.

By mid-2021, leader Kim Jong Un publicly acknowledged the country faced a "tense" food situation due to the pandemic and typhoons. Yet he also claimed industrial output had grown 25% compared to the same period the year before — a recovery, but from a very low base. Reuters By October 2021, he stopped pretending things were improving. He called the economic situation "grim" and ordered officials to focus on improving citizens' lives — language that in North Korea's rigid political culture signals real systemic strain, not just modest rhetoric. Reuters In 2022, he reframed his agenda around economic development and living standards, describing what he called "a great struggle for life." Congressional Research Service

The pandemic also changed the North Korean economy in a deeper way that goes beyond just the numbers. When the government tightened border controls and shut down informal trade networks to prevent disease, it also cracked down on black markets — known as jangmadang — that had operated in gray zones since the 1990s. These markets functioned as an unofficial distribution system that had let citizens buy and sell goods when the state system faltered. The pandemic gave the government a health excuse to reassert central control over economic activity it had never fully accepted, even though private markets had existed for decades. Reuters

The Turning Point: Russia Becomes a Strategic Partner

The picture changed significantly after North Korea shifted its focus toward Russia. Kim Jong Un and Vladimir Putin met in the Russian Far East in September 2023, then again in Pyongyang in June 2024. Congressional Research Service At that second meeting, they signed a "Comprehensive Strategic Partnership" — a formal agreement that went far beyond the occasional weapons deals they had done before.

What happened next mattered economically. North Korea supplied Russia with weapons and missiles for its war in Ukraine. Congressional Research Service North Korean troops were sent to fight alongside Russian forces. Congressional Research Service In return, Russia changed its approach to the international sanctions on North Korea. It had previously gone along with UN sanctions somewhat reluctantly. Now it became an active defender of North Korea, using its veto power at the UN Security Council to block efforts to enforce those penalties and opening doors to expanded trade and military cooperation. 38 North

Before 2022, Russia's veto power at the UN Security Council was a kind of insurance policy for North Korea — useful if needed, but not actively deployed. What changed is that Moscow started using that veto as an operational tool, blocking oversight mechanisms and simply ceasing to enforce the financial and trade restrictions it had nominally followed. For North Korea, this opened a significant channel for sanctions relief — not a complete end to international penalties, but enough to allow hard-currency earnings, access to technology, and a political signal to other potential partners that business was opening up.

South Korean analysts reported that North Korea's economy rebounded in 2023, marking the first growth after three years of contraction. Reuters North Korea also partially reopened its border with China that same year, restoring trade that had been suspended during the pandemic. Pinpointing exactly which change caused the growth is difficult, but the Russia partnership introduced a new type of economic input: weapons payments in goods, access to Russian energy and technology that China hadn't been providing, and revenue from North Korean workers being sent back to work in Russia.

Who Benefits From the Recovery?

In December 2024, Kim Jong Un called for stronger rural economies, with state media presenting this as a priority. Reuters On paper, the 2023 economic rebound sounds good. But a closer look reveals an uneven picture: growth at the national level masks significant gaps between different regions and groups of people.

Scholars who study North Korea's economy have noticed a persistent pattern since the early 2000s. When the overall economy grows, the benefits don't spread evenly. Pyongyang's elite — top officials and the merchant class that emerged from the black markets — tend to capture the largest share of new wealth flowing in from abroad. Rural counties, which depend on grain deliveries from the central government, are typically the last to see gains from export-led growth and the first to suffer when borders close or central supplies shrink. This imbalance has happened before. In 2002, the government tried to reform the economy by raising wages and official prices to acknowledge that markets were already operating. Growth improved for a few years, but by 2005–2006, the system for distributing food deteriorated again, and the government returned to strict central control. The cycle repeated: economic opening, followed by widening inequality, followed by tighter state control.

The key question is whether the new revenue from Russia will actually reach rural communities and ordinary people, or whether it will mainly feed the military and the elite. Kim's December announcement about rural economies suggests the government knows about this problem — he's trying to manage a recovery that has concentrated its benefits at the top. How much of the Russian partnership's economic windfall actually reaches rural areas and improves living standards for ordinary citizens will shape North Korea's politics and strategy over the next several years. Overall GDP numbers alone can't tell us that story.

The Bigger Picture: What Happens to Global Sanctions?

There's a larger strategic question here worth considering carefully. The UN sanctions against North Korea, built up in stages since 2006, were designed to work because the five permanent members of the UN Security Council — the United States, Russia, China, Britain, and France — mostly agreed on the need for penalties. Russia's decision to stop enforcing sanctions and use its veto power to block others from doing so has fractured that consensus. China has also loosened its enforcement at the margins. When one major power openly disregards sanctions, others face less pressure to comply.

The practical upshot is that North Korea enters the second half of the 2020s with more economic breathing room than it has had since the most intense pressure campaign of 2017 — while also expanding its military capabilities. Whether that economic relief actually translates into better living conditions for ordinary people, rather than simply reinforcing state power and military strength, remains to be seen. The answer will determine not just North Korea's internal politics, but also how the country calculates its long-term strategy. And that's something worth watching, because it goes beyond the kind of headline economic figures most people see.