Indications continue to suggest that international sanctions on North Korea have led to stagnation of the economy throughout the country. The signs of economic downturn include declining sales in the North Korean markets. Some merchants are now saying that their businesses are only gathering debt, North Korean sources report.
“Procurement prices [the prices merchants pay to buy products from wholesalers or manufacturers] have risen, but there’s fewer and fewer people coming to the markets to buy things,” a South Pyongan Province-based source told Daily NK.
“Merchants are saying that they’re not earning any profits. The cost prices have risen, but the dearth of consumers at local markets has cut into whatever profits they were making.”
“The production costs of flour, sugar, cooking oil and other products imported from China have continued to rise since 2018,” he said. “Merchants have survived by selling products produced in North Korean factories or those manufactured by individuals, but now I’m hearing that they just can’t survive this way anymore.”
The prices of materials used to manufacture products in North Korea have also risen, meaning that North Korean products are no longer cheaper than Chinese products.
Small-scale merchants at local markets have turned to selling popular beverages and food to increase sales, but still face difficulties earning enough money. The sheer number of merchants that have entered the fray has led to intense competition between them.
Investments by the donju (nouveau riche) have also decreased both in frequency and size.
“Donju in Pyongsong are not investing in the local economy as much anymore. Even when they do decide to invest, it’s not as much as they used to,” a separate source in South Pyongan Province reported.
“There’s fewer high-level investments they can make, such as apartment construction projects. They aren’t able to earn as much so they’re just focused on saving up their money.”
One donju who is very well-off (so well-off in fact that he went around saying that “even if the waters of the Taedong River dried up, the money in his pocket wouldn’t”) told the source recently that he would be “on the streets” if he invested as much as he had in the past.
“Donju are generally cutting back on expenses,” the source added, placing emphasis on the fact that even North Korea’s richest are worried about the state of the economy.
North Korea’s real-estate market, meanwhile, is facing reduced demand while house prices are falling. Daily NK recently found that the prices of apartments in Pyongsong, the site of North Korea’s largest wholesale market, fell more than 50% compared to the same period last year.
The fall in demand for apartments has led donju to avoid investing in new construction projects. In short, there has been declining demand for consumer goods along with reduced investments in infrastructure.
“People have been able to make money and survive without the public distribution system due to the markets, but now the markets are facing difficulties,” said the initial source. “People are questioning how they’ll survive if the markets fail.”