International Trade in North Korea

News Related to International Trade in North Korea

Business outline for North Korea

Economic Overview

Agriculture accounts for approximately one quarter of GDP (according to the CIA's sources), industry accounts for nearly 44% of the North Korean wealth, thanks to its large mining reserve, while the service sector contributes one third of the national income. 

According to the data published by the Central Bank of South Korea, the economy of the Democratic People's Republic of Korea grew by 3.7% in 2008, then decreased by 0.9% in 2009 and should further shrink in 2010 due to the monetary reform introduced in November 2009, as well as the worsening relations with South Korea. In the absence of official data published by the country, the estimations concerning North Korea's economy are considered a reliable source.

The economy of North Korea remains one of the world's last centrally planned system. Its government has started to "liberalize" agriculture by allowing "private farmers" to sell a wider range of products. In addition, it has also authorized the sale of certain products at prices close to those of the market. The role of market economy is nevertheless very limited. Even if there has been some attempts at decentralization, the fundamental option for a rigid centrally planned economy continues. However, North Korea has significant natural resources that could allow the construction of a modern economy. It has large deposits of coal, abounding water resources for power generation and a vast area of timber forests.

The majority of the population suffers from chronic malnutrition and bad living conditions.

FDI in Figures

North Korea has not been able to attract much FDI recently due to the sanctions imposed by the international community, especially by the USA. Foreigners are prohibited from establishing enterprises that can pose a threat to the country's national security such as pursuing activities in publishing, press, broadcasting, and telecommunications. Businesses that do not conform with the country's ideology are also forbidden. 

The increase in sanctions from the United Nations Security Council as well as the uncertain future of the Inter-Korean Industrial Zone of Kaesong, cast a shadow on the country's outlook. In a tense international situation, the perspective of new reductions on the deliveries of cereals and energy is a strong threat to the food security of the North Koreans. 

The sectors that attract most of the investments are infrastructure development, hotel industry and telecommunications. The main investing countries are China, South Korea and Japan.

Foreign Trade Overview

North Korea is one of the least open economies in the world. The government is not ready yet to create an economy that conforms to market laws. The country is not easily accessible as far as trade is concerned. Strict and unfavorable regulations imposed by the government create trade barriers. Economic relations of North Korea are limited to its neighboring countries (China, South Korea, Russia and Japan). During the coming years, the nation will be in great disadvantage due to its diplomatic isolation, which will prevent its economic development. 

The government spends huge amounts of money on military activities. Despite its national self-sufficiency, the country imports much more than what it exports which results in a sizeable trade deficit. Due to the deterioration of its domestic economy and some of its main export markets, North Korea will see its trade balance get worse in the following next years. 

The main trade partners of the country are South Korea, China and Thailand.