"Is This Really Pyongyang?"... North Korea’s Economy Hit by a Windfall, What’s Happening

North Korea Accumulates Foreign Reserves Through Troop Dispatch to Ukraine and Arms Exports
Luxury Goods and Apartment Boom in Pyongyang; GDP Also Up 3.5%
Sustainability in Doubt... "A Short-Lived Windfall Without Structural Reform"

North Korea is experiencing an unprecedented boom due to its military closeness with Russia and the deployment of its forces to Ukraine. Thanks to an influx of foreign currency, high-rise apartment complexes have sprung up across downtown Pyongyang and global luxury brands are on display in department stores, making the city appear noticeably more vibrant than before. However, experts unanimously point out that this visible growth is not based on fundamental economic development driven by internal structural reforms or improved productivity, and therefore has clear limitations when it comes to long-term progress.

North Korea is enjoying an unprecedented boom due to its military alignment with Russia and the deployment of troops to Ukraine. Getty Images

Omega Watches, IKEA, $500 Smartphones... Pyongyang is Changing

The UK daily Financial Times (FT) recently reported that consumer habits in Pyongyang have changed significantly. According to FT, when Chinese President Xi Jinping visited in 2019, Pyongyang's economy was in dire straits. But now, brightly colored high-rise apartments have begun to line the roads from the airport to the city center.

A North Korean woman photographed in downtown Pyongyang. Photo by Yonhap News Agency

In particular, at Pyongyang Daesong Department Store, overseas luxury goods such as Omega watches and Chanel cosmetics, imported via China to bypass North Korea sanctions, are now being displayed and distributed. At the Ryugyong Gumbit Commercial Center, a store under the Swedish furniture brand IKEA was spotted, but this appears to be a case of North Korea blatantly infringing on foreign brands' intellectual property rights. There are even new smartphone stores selling models costing about 500 dollars (around 700,000 won), equipped with app-based taxi hailing and QR code payment features.

Rachel Minyoung Lee, Senior Fellow at the Stimson Center, a U.S. think tank, analyzed that "Pyongyang has become strikingly more affluent and has transformed into a consumer-centric city," noting visible changes such as high-rise buildings, brighter streets, and the spread of leisure facilities.

'Windfall Profits' Driven by Troop Dispatch to Russia, Trade with China, and Hacking... GDP Surges 3.5%

The driving force behind Pyongyang’s 'apparent boom' is the influx of foreign currency generated by its closer relationship with Russia. According to the Institute for National Security Strategy (INSS) of Korea, between August 2023 and the end of 2025, North Korea is estimated to have secured between 7.7 billion and 14.4 billion dollars (about 10.7 trillion to 20 trillion won) in funds and goods in exchange for deploying troops to Russia and exporting military supplies.

In addition, the resumption of trade with China and illegal thefts of virtual assets have also contributed. According to the Stimson Center, North Korea's exports to China in the January–May period this year surged by 68% compared to the same period last year. Blockchain analytics firm TRM Labs announced that, in the same period, North Korea-linked hackers stole virtual assets worth 643 million dollars (about 900 billion won). Shreyas Reddy, a reporter for NK News, pointed out that "North Korea has risen as a modern-day pirate state through highly profitable virtual asset theft."

Vanity table of a North Korean woman. Chanel cosmetics are placed on it. Photo by Yonhap News Agency

Due to the impact of this inflow of foreign currency, the Bank of Korea said North Korea's real GDP in 2025 rose 3.5% year-on-year to 38.264 trillion won. The Bank of Korea assessed that the expansion of North Korea–Russia cooperation has had a short-term positive effect throughout the country’s economy, from manufacturing to services.

Different from South Korea's 'Vietnam Deployment'... Pyongyang’s Boom is Only an Illusion

However, experts believe that this foreign currency windfall is unlikely to translate into structural growth for North Korea's economy. North Korea still maintains an economic system that restricts the autonomous growth of markets, making it difficult to convert external funds into long-term growth drivers. There is also analysis that, unlike South Korea— which channeled the foreign currency earned through troop deployments to Vietnam into industrialization and export manufacturing infrastructure— North Korea’s situation is fundamentally different.

Peter Ward, a research fellow at the Sejong Institute, pointed out that North Korea is undergoing a kind of “project boom,” with enormous civil engineering projects designed to catch the leader’s eye, and said, “Given North Korea’s disposition, the regime is unlikely to prepare for the future when times are good, and this cannot be viewed as sustainable growth.”

Panoramic view of Pyongyang Future Scientists Street Getty Images

Ultimately, the recent consumption of luxury goods and the construction boom seen in Pyongyang is merely an optical illusion, created as foreign currency flowing in through North Korea–Russia cooperation is consumed almost exclusively by the leadership and a privileged class in Pyongyang. Unless North Korea guarantees market autonomy and undertakes institutional economic reforms, experts argue that the economic boom driven by wartime windfalls is likely to end as a temporary surge.

This content was produced with the assistance of AI translation services.