Following news that most state-run factories in Pyongyang and other major cities have suspended operations, North Korean sources report that the number of merchants in some areas of the country have fallen drastically. This situation is reportedly due to decreased purchasing power among ordinary North Koreans on the back of the country’s economic stagnation.
“Before international sanctions, there were around 1,000 to 2,000 merchants, including those selling their wares outside the market, but now I only see around 100,” a South Pyongan Province-based source told the Daily NK on April 10. “Even those remaining merchants are just barely holding on. Some of them went to other places to do business but had to return because their efforts met with no success.”
“Only half of the market officials that once collected market fees are visible now,” said the source. “The officials face physical harm by the merchants when they try to collect the fees, so they avoid being out in the open.”
The source also reported that “Merchants have to sell 15 kilograms or more of food per day to pay the market fees. They aren’t selling even one kilogram a day” and that “Merchants are asking themselves rhetorically whether they’re just selling wares at the market to pay the fees.”
An investigation by the Daily NK has found that there has been little change to the number of active merchants in Pyongyang, Sinuiju, Hyesan, Pyongsong, Chongjin, Hamhung and other major cities. Small markets, however, appear to be facing a decrease in merchants.
The source said that economic stagnation has impacted North Korea’s poor classes, including those living in agricultural areas.
“The factories are shut down so people can’t get paid, and this means that no one is heading out to the markets,” said the source. “The international sanctions are so bad that there’s no work left. People don’t have money to buy anything.”
Commodity prices relatively stable
North Korea has hit the so-called “farm hardship period,” which means that commodity prices have risen slightly. That being said, the price of rice has been stable at around 4,000 won per kilogram in major cities like Sinuiju and Hyesan.
“The sanctions are harsh, and the reason the price of corn isn’t rising is because people just don’t have any money,” said the source. “If merchants were to raise the prices, people couldn’t buy corn, so merchants have kept the prices low.”
“Gas prices are also cheap because factories aren’t producing anything, which means that vehicles aren’t going anywhere,” said the source. “Diesel and gasoline dealers made money before the sanctions, but now there’s no customers.”
North Korea observers say that international sanctions and the North Korean state’s active intervention in the market is ensuring commodity prices remain stable.
Cho Bong-hyun, the director of IBK’s North Korean Economic Research Center, told the Daily NK that “The fall in distribution at the markets is likely making sure that commodity prices stay the same” and that “State intervention may also be the reason for commodity prices being stable.”
“North Korean authorities have chosen to manage the economic system as much as they can, rather than leave the economy to fend for itself,” another source in South Pyongan Province told the Daily NK. “Food policy departments and business management committees within each people’s committee are ensuring crop prices stay low.”
“The state has ordered that all measures be taken to supply needed resources,” said the source. “Authorities are using official and unofficial (smuggling) routes to bring in needed resources.”