North Korea's Foreign Trade Shrinks... $713 Million, Down 17% Last Year

UN Sanctions on North Korea, Foreign Trade Decline Due to COVID-19 Border Closures

[Asia Economy Reporter Park Sun-mi] Last year, North Korea's foreign trade volume recorded $713 million, a 17.3% decrease compared to the previous year. Both exports and imports have continued to decline since 2020 due to ongoing UN sanctions against North Korea and border closures caused by COVID-19.

According to the '2021 North Korea Foreign Trade Trends' report released by KOTRA on the 14th, North Korea's exports in 2021 decreased by 8.2% year-on-year to $81.96 million, and imports dropped by 18.4% to $631.37 million. The trade deficit improved somewhat, shrinking by 19.7% from $684.37 million in 2020 to $549.41 million last year.

Trade with China, North Korea's largest trading partner last year, decreased by 10.4% from the previous year to $681.66 million (exports $58.11 million, imports $623.55 million). The trade deficit narrowed from $664.8 million in 2020 to $565.44 million in 2021, marking the lowest level since Kim Jong-un took power. China's share in North Korea's total trade expanded from 88.2% in 2020 to 95.6% in 2021. The heavy reliance on China remains, showing a trade dependency level similar to the peak in 2018 (95.8%).

Following China, Vietnam, India, Thailand, and Hong Kong ranked among North Korea's top five trading partners. Additionally, Hong Kong, Bangladesh, and Ethiopia newly entered the top 10. However, excluding China (95.6%) and Vietnam (1.7%), the combined share of the other eight countries in North Korea's foreign trade is only 1.6%, indicating a minimal presence.

In 2021, North Korea's largest export item was steel (HS 72), which increased by 109.7% year-on-year to $28.93 million, maintaining its position as the top export item following 2020. Mineral fuels and oils (HS 27), as well as clocks and parts (HS 91), also ranked high among exports.

Last year, North Korea's largest import item was mineral fuels (HS 27), including crude oil and refined oil, accounting for $370.35 million or 58.7% of total imports, continuing from 2020. Plastics and articles thereof (HS 39) and rubber and articles thereof (HS 40) were among the top imports, with fertilizers (HS 31) also entering the top ranks.

A KOTRA official pointed out, "Since 2020, North Korea has closed its borders to prevent the inflow and spread of COVID-19, resulting in a declining trend in foreign trade volume. Even this trade is mainly conducted with China due to UN sanctions." However, the official added, "This year, with the resumption of freight train operations with China, trade with China from January to April increased about sixfold compared to the same period last year, and international raw material prices are also on the rise, so trade volume may increase somewhat." They explained, "Whether North Korea opens its borders in the future will be a major variable."