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2020/2021 The DPRK Economic Outlook
CHAPTER 3. Impacts of COVID-19 on North Korea’s Trade

July 08, 2021

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    1. Introduction

    2. North Korea’s Trade with China in 2020

    3. North Korean Trade with Russia in 2020

    4. Conclusion

KDI


Introduction


It would not be wrong to call 2020 as the year of COIVD-19 as it shocked all parts of the world. The new coronavirus first appeared in China in December 2019 and spread worldwide after the first quarter of 2020, which prompted the World Health Organization (WHO) to declare an international pandemic. As of mid-April 2021, the number of confirmed patients1 approached 140 million people, and the number of deaths exceeded 3 million around the world.

North Korea was also hard hit by COVID-19. North Korea, with its weak public health protection system, enforced extreme measures such as closing the borders with China and restricting domestic travel in order to prevent the spread of the new virus. Such efforts were effective in containing COVID-19; however, they are likely to dampen the external trade and Jangmadang (“market”) activities on which the North Korean economy relied, resulting in a devastating impact on the North Korean economy. Although North Korea has long pursued “self-reliance,” the country has still relied on external trade to supply essential intermediate goods, such as oil. If border closure continues for a longer period of time, the supply of imported goods will fall scarce, which will then disrupt production activities. Furthermore, if the informal sector, which is a significant part of the North Korean economy, shrinks, the vitality of the North Korean economy will also decrease.

International sanctions, which were stepped up following North Korea’s nuclear tests and missile launch, were kept in place for several years. Even before the sanctions were lifted the corona crisis hit the North Korean economy pulling it further into the deep quagmire. Both the sanctions and COVID-19 became the external factors that substantially impacted the North Korean economy. This is because the sanctions banned North Korea’s external trade of major goods and the COVID-19 induced border closures disrupted human and material exchanges. Against this backdrop, this paper examines the impact of COVID-19 on the international trade of North Korea in 2020.

Due to the sanctions imposed by the international community North Korea’s dependence on China for external trade intensified. As a result, North Korea’s entire foreign trade was replaced by trade with China. Thus, the North Korea-China trade is recapitulated, and then a close look is taken on the major import and export products in order to analyze the impact of COVID-19 on North Korea’s trade with China. In addition to the trade between North Korea and China, this paper also closely examines the trade between North Korea and Russia. In terms of trade amount, North Korea’s trade with Russia is minimal compared to that of China; however, in order to comprehensively understand the impact of COVID-19 on the North’s foreign trade in 2020 it is meaningful to look at the trade between North Korea and Russia.

* This article is part of 2020/2021 The DPRK Economic Outlook

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The Department of Macroeconomics is conducting researches on the macro economy and macroeconomic policy, particularly focusing on suggesting the analysis of macroeconomic trends and current status of the economy at home and abroad, the economic forecast, and the policy direction of the macro economy. The Department is also in charge of establishing, sustaining and maintaining various econometric models, based on which it analyses policy effects and develops a long-term economic forecast.

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