North Korea’s Economy Expands as Ties to Moscow and Beijing Deepen

Driven by a surge in weapons exports and deepening trade alliances with Moscow and Beijing, North Korea’s economy grew by 3.5% in 2025. This marks the third consecutive year of growth exceeding 3%, with the nation’s total economic output now surpassing levels last seen before the imposition of stringent 2017 U.N. sanctions.

Editorial·July 31, 2026·reads: 2,412

North Korea’s Economy Expands as Ties to Moscow and Beijing Deepen

The Bank of Korea attributes this sustained expansion to a combination of state-led development initiatives and bolstered regional cooperation. Manufacturing output climbed 6.6%, fueled by demand for military hardware and the government’s "20x10" policy, which prioritizes the construction of light-industry factories across provincial regions. Construction activity also rose by 6.3%, centered on domestic infrastructure projects like railways and power plants.

Foreign currency inflows have been bolstered by the deployment of laborers and troops to Russia, alongside a notable increase in tourism. These factors helped push service sector growth to 1.8%, the highest level since 1994. While total trade volume, excluding South Korea, rose 16% to $3.13 billion, the economy remains modest in global terms. North Korea's nominal gross national income reached approximately $34 billion last year, representing just 1.8% of South Korea’s economic output. These estimates remain based on South Korean intelligence and trade agency data, as Pyongyang does not release its own official statistics.