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By: Benjamin Katzeff Silberstein
Is the North Korean economy in crisis after years of severe sanctions and the Covid-19 border closure? In a new report, the Bank of Korea’s answer is yes. They point to factors such as huge price increases for several basic commodities to show that shortages have led to price inflation across the board for critical consumer products:
The price of sugar in North Korea has multiplied by a factor of 8.3 between 2017 and the end of June this year, from 5,201 won to 43,000 won per kilogram. During the same period, the price of flour also grew 3.7 times in the country, from 5,029 won to 18,700 won per kilogram.
Sugar and flour are two of the main food items that North Korea imports from other countries. The extent to which their prices have increased in North Korea exceeds what can be observed in South Korea today due to high inflation. What could have happened in North Korea in the past five years to cause such a price hike?
On Monday, the Bank of Korea released a report titled “North Korea’s Economy Over the Past Five Years and Its Future Prospects,” detailing how the country’s economic environment has changed over that period. In a nutshell, the report states that North Korea’s economy entered another crisis period after the 2000s, when the economy grew, after the 1990s, when the country went through an economic crisis and famine known as the severe Mars. North Korea’s gross domestic product (GDP) declined by an average of 2.4% per year from 2017 to 2021 and is estimated to have declined by a total of 11.4% over this period.
The trigger for the crisis in North Korea was economic sanctions against the country and border closures due to COVID-19.