Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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A number of headlines have recently appeared making strong claims about the North Korean economy. According to some reports, the isolated dictatorship is undergoing a full-blown economic miracle, complete with record-shattering growth and LED-clad skyscrapers popping out of the Pyongyang urban landscape. What is Kim Jong Un up to?
To save the reader some time, these headlines are completely misleading. The beleaguered country is still ridiculously poor, the economic growth observed over the last few years is almost entirely artificial, and anyone saying that the recent bump proves anything should be ignored.
First things first, let us look at the actual growth figures. North Korea does not publish official economic statistics, leaving us to rely on models from the likes of the International Monetary Fund and South Korea’s Central Bank. According to those estimates, the North Korean economy grew by 3.5% in 2025, marking the third consecutive year of growth above 3%.
While not terrible, the 3.5% figure is only noteworthy because it comes from a nation more commonly associated with forced labour camps and breadlines than economic prosperity. Cambodia has a similar sized economy, and it grew by 6.1% over the same time frame. To put the figure into more perspective, the United States grew at an annualised rate of 2.2% in 2025, a year during which the government was completely shut down for a month and a half. China grew 5% over the same period.
3.5% GDP growth is hardly an impressive statistic to begin with, but it becomes even harder to defend when considering that the North Korean economy is only now matching the same level it reached back in 2017, following heavy sanctions and border closures during the COVID years.
Either way, it is worth looking at whether the recent growth spurt is merely a passing phase or whether it has any legs to it.
The main driver behind the economic turnaround is in fact the Russia-Ukraine war. North Korea has effectively turned its entire manufacturing base into a giant ammunition production line, churning out millions of artillery rounds and scores of ballistic missiles to fuel wartime efforts on Russia’s western border. According to some estimates, weapon sales to Moscow amounted to almost $15 billion between 2022 and 2025.
To put the above figure into perspective, North Korea’s GDP currently sits at around $30 billion, according to the kinder approximations, meaning ammunition sales alone account for a huge part of the recent surge in economic output. $3-4 billion per year may not seem like much on a national scale, but for a completely closed country such as North Korea, the figure represents a phenomenal windfall.
Beyond artillery shells, North Korea is also providing Russia with infantry reinforcements, to the tune of tens of thousands of troops thus far. The harsh dictatorship is acting more like a private military company than a martial ally in this regard, renting soldiers to Russia for a monthly fee of around $2,000 to $3,000. The arrangement has also extended to labourers, farmhands, loggers and factory workers, all of whom work long hours and surrender most of their pay directly to the North Korean state. As rough as this sounds, such jobs are highly sought after because they provide better financial rewards than those available back home.
The economic boon to North Korea involves more than simple cash payments, extending to food, energy, technology and infrastructure improvements, including the first road bridge connecting the two countries.
Interestingly, the rapprochement with Russia has given the North Korean leader additional leverage against China. Historically, Beijing had de facto veto power over Pyongyang, but now that Russia is financing a third of the North Korean economy, this power balance has dramatically shifted.
With that said, China remains the primary lifeline to the isolated northern state, accounting for the vast majority of its global trade, which has seen a sharp rebound following the termination of COVID lockdown measures. Cheap labour is once again a major part of the deal, but increasingly, mineral exports are contributing to the picture in an effort to make up for shortfall currently affecting the ravenous Chinese industrial sector.
The problem with the sudden influx of cash is that it is being disproportionally deployed to the state capital. Tens of thousands of modern high-rise apartment blocks now adorn the Pyongyang skyline, prompting foreign visitors to coin the term ‘Pyonghattan’ to describe the burgeoning metropolis.
Sarcasm aside, satellite imagery tells the same story. A comparison between now and ten years ago shows just how much more brightly the capital shines during the night hours. Unfortunately, the rest of the country remains almost totally submerged in darkness, betraying the centralised nature of development efforts.
Kim Jong Un is on the case. In a bid to tackle the overlooked hinterlands, the Supreme Leader has embarked on an ambition plan to bring the provinces up to speed. The result is the 20x10 policy, a legal mandate to modernise 20 rural cities every year over a 10-year period. Leaning more on the pragmatic side, the measures focus on basic family homes, light industry and general service centres. The problem with such a top-down approach is that it is uprooting more natural systems and replacing them with heavily regulated state-run institutions. Rather than allowing people to trade freely, the government is muscling in on every private aspect of people’s lives.
Results so far have been mixed. Embarking on massive public infrastructure projects is a great way to rapidly pump-up GDP figures; government spending is one of the four components of the ubiquitous metric, after all. Even building a road to the middle of nowhere can serve a purpose, as disingenuous as that purpose may be. North Korea is not the only country guilty of such practices. Large construction ventures are also very handy for propaganda objectives. North Korea is not alone in this regard either. Sadly, a good photo op does not feed a village, nor does it keep the lights on, as nighttime satellite imagery continues to demonstrate.
Comparing North Korea with its southern neighbour reveals an even starker contrast. The difference in illumination is absolute; from high above the clouds, the border is easily identifiable by lighting alone. Given that South Korea’s economy dwarfs that of its northern counterpart by a conservative 50:1, despite having only double the population, this is unsurprising.
That last statistic is the final nail in the coffin with regard to claims of North Korea’s miraculous economic growth. Wishing only the best for its people, the country itself offers little reason for hope.
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