North Korea's economy grows at fastest rate in eight years as arms sales fuel boom

North Korea’s economy is posting its strongest growth in nearly a decade, powered by a wartime partnership with Russia and continued Chinese trade that together have generated billions of dollars for the isolated regime, according to analysts and visitors cited by The Wall Street Journal.

The Bank of Korea, South Korea’s central bank, estimated that North Korea’s gross domestic product grew 3.7% in 2024, the fastest pace since 2016. The estimate is based on intelligence-agency data. South Korean think tanks say the growth has continued into 2025.

The expansion marks a sharp reversal from the early pandemic years, when North Korea’s border closures caused trade with China to plunge, energy shortages halted coal mines, and basic goods such as vegetable oil and sugar became scarce. Kim acknowledged the economic failure at the time, publicly shedding tears and admitting “almost all sectors fell a long way short.”

The turnaround began after Russia’s February 2022 invasion of Ukraine, which North Korea publicly endorsed. By mid-2023, Pyongyang became a major munitions supplier to Moscow, earning more than $10 billion through the end of last year, according to the Institute for National Security Strategy, or INSS, a think tank affiliated with South Korea’s National Intelligence Service. North Korea also deployed more than 15,000 troops to fight alongside Russian forces, with about one-third killed or wounded, the INSS estimated.

The deeper relationship with Russia has brought North Korea not only cash but also advanced military technology, analysts said. New North Korean warships and drones resemble Russian designs, weapons experts have said. Russia has sent air-defense systems to Pyongyang, according to South Korean officials.

North Korea’s economy also has benefited from flourishing trade with China. Monthly bilateral trade hit an eight-year high, the Journal reported, with Chinese consumer brands and electric vehicles entering the North Korean market despite sanctions. Chinese leader Xi Jinping is scheduled to visit Pyongyang this week for his first foreign trip of the year, a sign of deepening ties.

Within Pyongyang, the economic gains are visible. Rowan Beard, an Australian tour operator who has visited North Korea more than 100 times, said he was surprised on a recent trip to find a ride-hailing app called Samhung that allowed him to track a taxi’s movements in real time. “This was all totally new,” Beard told the Journal. “My mind was blown.”

Restaurants in the capital serve brick-oven pizza and chicken wings, diners pay through mobile QR-code systems, and Chinese electric vehicles navigate streets once dominated by older cars. North Korea built 10,000 new homes in Pyongyang last year — more than either Los Angeles or Chicago, the Journal noted. New pet stores, internet-gaming cafes, and car dealerships selling BMWs have opened.

At the twice-a-decade Workers’ Party congress in February, Kim touted the economic turnaround, saying in a speech it had come about despite the “barbaric blockade” of U.S.-led economic sanctions. On display outside the building were seven rows of new rocket launchers.

North Korea’s economic strength is the greatest since Kim assumed power nearly 15 years ago and likely exceeds any point during his father’s rule, said Stephan Haggard, a researcher of North Korea’s economy at the University of California, San Diego. “This is an incredible accomplishment for a country that is this poor,” Haggard said, noting that Kim also benefited from some luck.

The regime has used its nuclear program as a deterrent, enabling Kim to shift focus to economic development without fear of military attack or forcible removal. The prosperity dims the prospect of a nuclear deal with the United States, which has historically offered sanctions relief or economic incentives in exchange for denuclearization steps. President Trump has touted his relationship with Kim and offered to meet again, but no substantive talks are underway.

North Korea’s cyber operations also have generated billions of dollars, according to nations and cybersecurity groups monitoring Pyongyang’s activities. Many of Kim’s cyber thieves operate from China, the Journal reported, where they can freely connect to the internet.

Outside the capital, the picture remains stark. Nearly half of North Korea’s 26 million people are malnourished, according to a U.N. report. The country remains one of the world’s worst violators of human rights, where distributing a South Korean drama can be punishable by death.

Still, signs of economic activity have spread beyond Pyongyang. Ben Weston, who runs a YouTube channel about North Korea, visited a special economic zone near the China and Russia borders last year and reported new fleets of taxis and modern buildings replacing older homes. “These projects seemed to be happening all over the country,” he said.

In May, North Korea held its first full-scale Spring International Trade Fair since the pandemic, with more than 290 companies from Russia, China, Mongolia, Switzerland and Thailand attending. A North Korean electronics company showcased “intelligent TVs” that enable viewers to purchase goods. Smartphones in red, blue and orange were exhibited, some costing more than $500. “We are listening to the people’s demands,” a saleswoman told state broadcaster.

The regime is expanding state-run shops and pharmacies to replace black-market activity and creating state jobs for traders who previously engaged in smuggling, said Lee Sang-yong, a researcher with a network of sources inside North Korea who heads a data-research center owned by DailyNK, an online publication. “Some of the funds that the Kim regime made through selling weapons and hacking are trickling down to the residents,” he said.