In recent years, the North Korean government has intensified efforts to collect foreign currency held by its citizens. This situation not only reflects North Korea’s lack of foreign currency, but also highlights the country’s poor performing domestic currency (the Korean People’s Won, or KPW) and, more broadly, signals that the country’s economy is in dire straits.
North Korea entered one of its worst economic crises ever following the closure of the China-North Korea border in January 2020 to prevent the spread of COVID-19 into the country. By the end of 2020, North Korea’s external trade (excluding inter-Korean trade) fell to $8.6 billion, a drop of 73.4 percent compared to trade levels in 2019. The country’s foreign trade dropped again in 2021 to $7.1 billion, a decline of 17.3 percent compared to trade levels in 2020. These figures are extremely low; indeed, they have broken the record for North Korea’s lowest trade numbers ever since such data began being collected in 1990.
North Korea has long suffered a lack of foreign currency and, in 2017, the U.N. Security Council adopted four resolutions (Resolutions 2356, 2371, 2375, and 2387) that cut off most of North Korea’s sources of foreign cash. Specifically, the sanction resolutions halted most mineral exports from the country – a major source of trade between China and North Korea – and banned North Koreans from working abroad. The sanctions also stipulated a lower limit on oil imports, which seem to have decreased the amount of crude oil imports into North Korea.
The COVID-19 pandemic only worsened this already difficult situation for North Korea. When the country shut down its borders in January 2020, it essentially closed the doors to what limited trade options it had available. Facing shortages of raw materials, North Korean factories became unable to operate properly, and markets throughout the country experienced a significant degree of stagnation. Naturally, the overall economic downturn caused by the pandemic and the government’s response to it have continued to eat away at the funds needed to rule the country.
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