Introduction

A defining characteristic of the North Korean economy in 2024 was the growing discrepancy between official production and market-based indicators in the manufacturing and agricultural sectors. Performance in both sectors was projected to remain stable and broadly consistent with 2023 levels, with external trade showing a similar pattern. In stark contrast, market indicators such as prices and exchange rates experienced a dramatic upheaval.

Significant increases were observed in the prices of key staples, including rice, corn, pork, and refined oil, as well as in service-related fees such as storage rentals and servicha (freight truck) usage fees. These developments point to a broad-based rise in market inflation. Most notably, the market exchange rates for the U.S. dollar and Chinese yuan more than doubled, marking the most pronounced shift since the aftermath of the 2009 Currency Reform.

The rise in market prices and exchange rates in 2024―despite relatively stable production―likely stemmed from multiple interrelated factors. Chief among them were the North Korean authorities’ ongoing efforts since late 2019 to strengthen state control over distribution, the tightening of restrictions on foreign currency use, and the wage and official price increases reportedly implemented at the end of 2023.

The government’s sustained crackdown on foreign currency transactions appears to have reduced the supply of foreign exchange in domestic markets. At the same time, the resumption of trade with China beginning in 2023 likely led to a sharp increase in demand for foreign currency, placing significant upward pressure on exchange rates. The state’s effort to centralize grain distribution further constrained the supply of goods in market channels, while the increase in official procurement prices, which is closely tied to market grain prices, contributed directly to inflationary pressures.

Moreover, the depreciation of the North Korean won, driven by the public’s deep-rooted lack of confidence in the national currency and tighter control of foreign currency usage, likely fueled additional demand for and shortage of foreign exchange. This dynamic may have created a self-reinforcing cycle of currency depreciation and inflation.

Although limited data make precise evaluation difficult, one potential factor influencing market prices is North Korea’s expanding economic cooperation with Russia. The full extent and nature of this cooperation―beyond military ties― remain unclear. To date, reported imports from Russia appear to be confined to a few commodities, including wheat, refined oil, and a few livestock products such as goat meat. While the relative stability of flour prices may reflect the effects of these imports, refined oil prices have reportedly continued to rise in line with broader
market inflation. This suggests that, thus far, the impact of Russia-North Korea economic cooperation on market prices and exchange rates has been limited.

This chapter examines recent developments in North Korea’s domestic economy, with a focus on market prices and exchange rates. The analysis draws on data from domestic and international media sources, as well as North Korea-focused outlets.

To support comparative analysis, the study incorporates external estimates alongside international price and exchange rate data. Due to limitations in data availability, the analysis is based on a limited set of market items and may not fully capture broader pricing trends in North Korea.

Section 2 reviews recent trends and key characteristics of market prices and exchange rates, providing a snapshot of the current economic environment. Section 3 explores the underlying factors driving the rise in market indicators. Finally, Section 4 presents a forward-looking assessment of potential developments in prices and exchange rates, concluding with key issues that warrant continued attention in the context of North Korea’s domestic economy.

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

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