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At a time when the US is trying to squeeze the Kim regime through new sanctions — pressure that is likely to increase as a result of the death of US student Otto Warmbier who was jailed in North Korea — the economy is showing signs of vitality that could make it even harder to exert leverage on Pyongyang.
Any analysis of the North Korean economy has to proceed with some caution. Reliable economic data for the isolated nation are scarce and estimates vary wildly. Forecasts for 2015 growth in gross domestic product per capita ranged between -1 per cent by the Bank of Korea in Seoul to 9 per cent from the Hyundai Research Institute.
“The challenges of accurately computing North Korea’s GDP are many and are derived principally from a paucity of credible macroeconomic data,” says Kent Boydston, analyst at the Peterson Institute for International Economics. But for close watchers of the reclusive nation, the signs of change are clear. Notably, wages have surged, as has the growth of a moneyed class known as the donju. “The changes are obvious when you go to Pyongyang. There is vehicular traffic and the city has a skyline like never before,” says a former US intelligence official, pointing out the growing use of previously rare items like solar panels and air conditioners……..
The result, according to North Korea watchers such as Prof Lankov, is “a significant improvement in living standards” and economic vibrancy, most evident in the flourishing number of restaurants and markets. Known as jangmadang, these markets — both official and unofficial — have proliferated rapidly in recent years and are now increasingly the norm for purchasing consumer goods.
According to a survey of more than 1,000 defectors by the Korea Development Institute, a state-run think-tank in Seoul, more than 85 per cent of North Koreans now use these markets for food, compared with 6 per cent who rely on state rations.
Wages have also appeared to increase exponentially in recent years. According to the institute, salaries in the official state sector have increased more than 250 per cent in the past 10 years to about $85 (more than 75,000 North Korean won) a month, while wages in unofficial “side” jobs, such as private enterprises, have boomed more than 1,200 per cent. Lee Byung-ho, then head of South Korea’s intelligence service, estimated earlier this year that 40 per cent of North Korea’s population is now engaged in some type of private enterprise.