Josh Smith

SEOUL (Reuters – North Korea’s isolation economy won’t be protected from global economic headwinds resulting from the Ukraine War and COVID-19 Lockdowns in China. Analysts said that recently resumed border trading has been affected and that inflation is causing food shortages.

To prevent COVID-19 epidemics, strict international sanctions were used to ban imports from and restrict exports of North Korea. Flooding and other natural disasters have caused severe damage to infrastructure and taken their toll on the harvest.

According to analysts, the trade truce and other aid which was resumed at China’s border last January likely did not address reported food shortages. Last week trade was again suspended as more COVID-19 patients were being diagnosed in China. Satellite imagery shows that goods are held in quarantine for several weeks to months at sea ports and land facilities.

“As food prices in North Korea do often move in tandem with global prices, we’re likely to see current food price hikes mirrored in North Korea as well over time,” said Benjamin Katzeff Silberstein, an economic expert with the U.S.-based Stimson Center.

An extended border closure has forced the withdrawal of most international aid workers from the country. It is unclear how serious the situation is.

According to U.N.’s special rapporteur for human rights in North Korea, last year the nation’s most vulnerable persons were exposed to starvation as a result of the COVID-19 pandemic.

North Korea’s government acknowledged that there is a tight food supply situation. However, it has denied claims of residents not being provided for.

The World Food Program estimated that even before the pandemic hit, 11 million people – or more than 40 percent of the population – were undernourished and required humanitarian assistance.

BOON FOR THE ILLICIT COAL

According to Katzeff Silverstein, North Korean coal producers will benefit most from higher energy prices around the world.

North Korean coal – which is banned from export by United Nations Security Council resolutions – costs a fraction of the global average. However, North Korean commodities have seen prices rise 40% in six months. This is according to Seoul-based Daily NK.

According to U.N. sanctions monitors, although coal smuggling remains at a low level due to sealed borders, it increased in the second quarter of the last year.

While this may provide some relief for the regime’s finances, corresponding rises in coal prices at home could be detrimental to local residents.

Although it is difficult to distinguish the effects of Ukraine’s crisis from those caused by other factors, Christopher Green (a Korea specialist at Leiden University, the Netherlands) said that North Korea is susceptible to economic trends worldwide.

He stated that exports from North Korea could fall if China enters a recession, which is impossible given the many issues China has.

‘NOT SUSTAINABLE’

Kim Jong Un, the leader of North Korea’s military and civilian forces has pledged to raise living standards through major construction projects in rural areas and rural development.

Kim has unveiled thousands more apartments in Pyongyang. The state media reports that many agricultural areas are looking to boost crop yields with “homemade fertilizer”, upgrading their tractors and trying new ways of raising rice.

State media reports that authorities have taken other steps to prevent flooding and droughts. This includes the deployment of more pumps.

Many of these efforts rely on mobilising masses of labourers because of a lack of heavy equipment and supplies, said Lee Jongkyu, a senior fellow at the Korea Development Institute in Seoul.

“In the short term perspective, these projects might be effective, but it’s not sustainable for the mid- to long-term perspective,” he said.