How Big Is North Korea’s Economy? Pick a Number, Any Number

The Mass Games performed in Pyongyang in 2013. Photographer: Jonas Gratzer/LightRocket/Getty Images

By Alex McIntyre and Adrian Leung

June 10, 2018

Donald Trump and Kim Jong Un’s landmark summit on June 12 has spurred hope that North Korea may finally open its economy. That could also be a boon for economists, who know next to nothing about how it actually works.

North Korea stopped releasing detailed statistical data in the 1960s, and for the next four decades the only hard economic numbers came from limited revenue and spending figures in annual national budget reports. The government removed absolute numbers altogether in the early 2000s, and since then has only offered year-on-year percentage changes for various oddly described sectors. They look like this:

*Includes power, metal, coal, chemicals, machinery, light industry, railways, agriculture, fisheries.
**Officially, “Strengthening the independence and Juche character of the national economy and improving the standard of people’s living.”

The dearth of information has left economists with little option but to combine these patchy figures with inexact estimates of agricultural and industrial output based on satellite photographs, thermal imaging and, according to Marcus Noland, an expert on North Korea at the Peterson Institute for International Economics, possibly a network of spies in the country. Noland has written that he’s “only half-joking” when he tells people he makes up his data on the country.

South Korea’s central bank—considered the most authoritative source for North Korean economic data—uses figures compiled by the government and intelligence agencies to make estimates. That includes everything from water flows at dams to smoke coming out of chimneys to the size of rice paddy crops, according to Lee Seog-Ki, senior research fellow at the Korea Institute for Industrial Economics & Trade, a think tank run by South Korea’s trade industry.

Once numbers are produced, often they aren’t comparable. One estimate might present gross domestic product in local currency, another in current-year dollars, and still another in inflation-adjusted dollars. Since most projections use the same units for North Korea and South Korea—and South Korea has generally reliable statistics—we can use GDP ratios of the two countries to show how varied the North Korea estimates are:

Over a 26-year run, the Bank of Korea has estimated North Korea’s economy to be roughly 1.8 times the size the United Nations thinks it is. While such wild deviations would sound unreasonable for any other country, agencies are upfront about how much uncertainty is involved. The CIA, for instance, acknowledges that its GDP estimate (adjusted for purchasing power parity) of $40 billion has been “rounded to the nearest $10 billion.”

The lack of data makes it nearly impossible to know how much money the average North Korean citizen earns per year. Here are the figures for 2011, a year that allows the closest comparison among agencies with no adjustment, given the availability of data:

Trade statistics aren’t much more reliable, even though other countries must report their imports and exports with North Korea. That’s due to a number of reasons: Governments sometimes confuse the two Koreas when reporting trade, and they may be tempted to keep some transactions hidden with a rogue regime under international sanctions.

So if the numbers on North Korea’s economy are so flawed, then why do agencies bother to publish anything at all? Rüdiger Frank, who has studied North Korea since spending a semester in Pyongyang in the early 1990s, says it comes down to supply and demand: “If you keep asking for numbers, they will eventually be produced.”

Source: UN, IMF, KOTRA, Bank of Korea, U.S. State Department, CIA, Maddison Project Database at the Groningen Growth and Development Centre, U.S. Bureau of Labor Statistics

Methodology: For total GDP figures, except for the CIA, each source provided either direct GDP figures or GDP per capita and population figures which were multiplied together to compute total GDP. The CIA provided North Korea’s GDP for 2013 and South Korea’s GDP for 2017, both in current-year USD at market exchange rates. In addition, the CIA provided real GDP growth estimates for 2013, 2014 and 2015 for North Korea, and 2015, 2016 and 2017 for South Korea. This allowed for the harmonization of both Koreas’ GDP data by using the estimated growth rates to calculate implied GDP estimates for 2014 and 2015. A final adjustment of North Korea’s GDP figures was made from 2013 dollars to 2017 dollars (a 5% increase) using the Bureau of Labor Statistics’ inflation calculator.

GDP per capita figures were either provided directly by each source or calculated using total GDP and population figures provided. UN figures were provided in 2010 USD, Maddison Project figures in 2011 USD, U.S. State Department figures in current-year (2011) USD, and Bank of Korea figures in current-year (2011) South Korean won, which were converted to USD using 2011’s average USD-KRW exchange rate.

Trade statistics represent the total value of all exports and imports of goods to and from North Korea, as reported by all other countries, in current-year dollars.

How Big Is North Korea’s Economy? Pick a Number, Any Number

Increase in spending from 2017 to 2018

South Korea/North Korea GDP ratio, according to...

2011 North Korea GDP per capita, 2011 USD, according to...

Total trade in goods by North Korea, according to...