Introduction

As the international community fortified its sanctions against North Korea on the back of its fifth nuclear test since 2006, many expected that the North Korean economy would not be able to recover. In fact, with the first negative growth (-1.1%) in 2015 since Kim Jong-un’s ascension to power, it was very possible that the downturn would continue for a second year. In response, the North Korean regime focused on rallying the efforts of its citizens, reaping certain “superficial,” short-term gains in the process. Nevertheless, the struggle will have to continue in establishing workable policies for 2017, especially in light of the significant political and social burdens generated by the forced mobilization to boost the economy.

Contrary to statistical evidence on the above, however, North Korea''s informal sector (market) continued to grow in 2016. This is confirmed by the fact that North Korea''s market prices and foreign exchange rate remained stable in spite of the international sanctions - this has been further upheld by numerous reports from the outside world on the North’s smooth market operations. In particular, the informal sector has played a crucial role in securing foreign currency, despite past difficulties, cushioning the external impact and positively influencing the people''s economic activities.

Accordingly, this chapter examines the trends in North Korea''s major economic policies in 2016, which are typically synonymous with artificial economic stimulus measures such as forced mobilization (e.g. 70-Day and 200-Day Battles). The chapter also presents brief interpretations on interesting phenomena detected in market price and exchange rate trends and North Korea''s informal sector. Lastly, although there are limitations in the analysis due to data and information, the chapter will discuss the direction of North Korea''s economic policies for 2017 and the issues to be faced.

* This article is part of 2016 The DPRK Economic Outlook

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