Introduction

The year 2024 marks a turning point for the North Korean economy, both domestically and internationally. Externally, Pyongyang has strengthened its political, diplomatic, and military cooperation with Moscow, deepened economic ties, and signaled a notable shift away from its longstanding economic dependence on China. Although Russia has not released official trade statistics since the onset of the Ukraine war, economic exchanges between the two countries, particularly in the military sector, are believed to have grown substantially in 2024.

On the domestic front, there has been a clear effort to strengthen the Cabinet’s authority over economic policy―signaling a departure from the early Kim Jong Un era, which prioritized stable growth through limited oversight of Partyaffiliated institutions and the informal economy. Increased regulation of the informal sector, however, risks disrupting the very mechanisms that once helped maintain macroeconomic stability, potentially intensifying volatility in prices and exchange rates. The sharp depreciation of the North Korean won throughout 2024 underscores these concerns.

In January 2024, the government unveiled the 20x10 Regional Development Plan, aimed at reducing economic disparities between Pyongyang and the provinces, as well as between urban and rural areas, by revitalizing regional economies. Although rural development has been highlighted before, this centrally driven, nationwide initiative represents a distinctive and significant policy turn.

Looking ahead, North Korea’s economic trajectory in 2025 is expected to largely follow the path set in 2024. Cooperation with Russia is likely to deepen further, while domestic policies will continue to focus on tighter control of the informal sector and greater reinforcement of the formal economy. Key challenges for the authorities will include balancing economic engagement with both Russia and China, and maintaining growth momentum while expanding regulatory control over informal activities.

Notably, 2025 marks the final year of North Korea’s current Five-Year Plan, making it a critical juncture for evaluating economic performance. The regime is likely to emphasize visible achievements―such as new infrastructure and factory construction―as evidence of the plan’s success, despite difficult conditions. Rather than accepting official narratives at face value, though, it is essential to objectively assess how the economy has structurally evolved over the past five years and what those changes signify.

This chapter aims to provide a comprehensive evaluation of North Korea’s economic developments in 2024, analyze the key issues shaping the outlook for 2025, and forecast prospects as the current Five-Year Plan concludes.

Section 2 begins by examining the key issues that continue to define the overarching characteristics of the North Korean economy in 2025, in light of developments in 2024. Foremost among these is the evolving relationship between Russia and North Korea. The analysis explores how the deepening partnership with Moscow has served as a substitute for Pyongyang’s traditional dependence on China, and whether it may also function as a complement going forward.

The second issue is the sharp depreciation of the North Korean won. Since the beginning of Kim Jong Un’s leadership, the won-dollar exchange rate had remained relatively stable at around 8,000 won. This stability was abruptly disrupted in 2024, with the rate surging past 20,000 won by year’s end. This section investigates the causes and implications of the shift, assessing whether it signals a “new normal” or a temporary anomaly.

The third issue is the 20×10 Regional Development Plan, actively promoted by the authorities since early 2024. Objective indicators show that urbanrural and regional disparities remain stark, prompting renewed emphasis on regional development. The section evaluates the initiative and projects its potential trajectory.

Finally, Section 2 considers how recent improvements in the fiscal situation could reshape the role of the formal economic sector moving forward.

Section 3 provides a sector-by-sector assessment of the North Korean economy in 2024 and offers a comprehensive evaluation. It also considers the direction of the 2025 economy by analyzing the outcomes of last year’s plenary session and this year’s Supreme People’s Assembly.

Section 4 concludes the chapter by outlining the policy implications derived from the preceding analysis.

* This article is part of 2024/2025 The DPRK Economic Outlook

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