The effects of years-long UN and U.S.-led sanctions — aimed at curbing Pyongyang’s nuclear ambitions — have been compounded by border closures during the COVID-19 pandemic, domestic mismanagement, and mounting isolation. Despite limited efforts to resume trade with China earlier this year, recent reports suggest that cross-border commerce remains far below pre-pandemic levels.
According to a new assessment from the Seoul-based Korea Development Institute, North Korea’s GDP contracted by nearly 4% in 2024, with no signs of recovery in the first half of 2025. Basic goods have become scarce, black market prices have soared, and malnutrition is reportedly rising — particularly in rural provinces far from the capital.
“North Korea’s economy is not just stagnating — it’s unraveling,” said Dr. Lee Hyun-wook, an economist specializing in North Korean affairs. “The regime is losing its ability to stabilize prices and control supply chains, even within the military.”
Satellite imagery and reports from defector-led monitoring groups suggest increased activity at key transportation and trading hubs, but not necessarily in ways that indicate formal economic revival. Instead, there is evidence of intensified smuggling, especially along the Chinese border.
In a rare admission, North Korean state media last month acknowledged the “difficult conditions” facing the country, calling for “revolutionary self-reliance” and renewed loyalty to Supreme Leader Kim Jong-un. Meanwhile, Kim has doubled down on military spending, overseeing missile tests and inspecting weapons factories, even as citizens reportedly face electricity blackouts and food rations.
International observers remain divided on how close North Korea is to systemic collapse. While some argue the regime has weathered similar downturns before, others point to an increasingly unsustainable reliance on underground markets and illicit trade.
Humanitarian groups have expressed growing concern. The World Food Programme recently reiterated its appeal for access to vulnerable regions, warning that over 40% of the population is at risk of acute food insecurity.
Despite the mounting pressure, there are few signs that Pyongyang is willing to change course. Denuclearization talks remain stalled, and new sanctions were announced by the U.S. Treasury Department earlier this month targeting North Korean shipping companies and cyber operations.
As the country enters another harsh summer with dwindling resources, the question looming over policymakers worldwide remains the same: how far can North Korea be pushed before it breaks — and what happens when it does?