North Korea’s Economy Seen Barely Growing as Pandemic Pain Lasts
North Korea’s economy will barely grow in 2021 after its worst contraction in decades as the country continues to struggle with the pandemic, U.S. sanctions and a lack of trade with China, according to Fitch Solutions.
In its latest report Fitch slashed its economic growth forecast for the Pyongyang regime to just 0.5% for this year from an earlier projection of 2.5%. Shortages of basic necessities, including rice, have added to the country’s economic woes recently, prompting some Russian diplomats to leave.
The small expansion would come on the back of an 8.5% contraction last year when the pandemic battered trade with China and led to strict regulations on public activity, the report said. That means North Korea’s recovery will fall well behind the rest of the world where a strong rebound is expected on vaccinations and looser virus restrictions.
North Korea doesn’t release official economic data, and Fitch is among the few private firms that analyze growth in Kim Jong Un’s economy. The South Korean central bank will release its estimate of how the communist regime fared during the pandemic in mid-2021.
The collapse in North Korea’s trade with China continued in the first two months of 2021 even as the world’s second-largest economy recovered from the pandemic quickly, Fitch said in its report Friday.
“This reflects the constraints that North Korean traders are still facing, with reports now suggesting that the country’s trade is confined to medical supplies, fertilizers and construction materials,” Fitch said. “We do not expect to see a relaxation of international sanctions on North Korea any time soon, as the U.S. Biden administration is unwilling to reward Pyongyang without the latter making a tangible gesture in relation to abandoning its nuclear weapons program.”
North Korean leader Kim made a rare admission that economic policy was falling short when he replaced his point man in charge of the economy last summer. He shut down the borders with China early 2020 as cases started to rise in its giant neighbor and around the world.
The country hasn’t officially reported a single coronavirus case yet, although its claims are doubted by U.S. and Japanese officials.
©2021 Bloomberg L.P.