Recent Trends of Market in North Korea

North Korean markets had a hard time to recover their pre-reform level after the currency reform in November 2009. In general, currency reform can be a good thing. For example, Ghana and Turkey had a successful economic reforms recently. During the currency reform, North Korea limited the amount of old money that can be converted but usual currency reform allows all citizens to convert all the old currency they are holding. Finally, its markets looks like returning to their original level slowly nowadays.

On February 2010, North Korean Premier Kim Yong Il apologized about the currency reform without sufficient preparation and the pain to the people it caused. Until that time, despite all of the protests and the inflation, market transactions were reduced, trade with China was being curtailed, and exchange by foreigners who live there was not possible anymore. But it was skeptical about the possibility of riots by North Korean citizens.

Between February and April, the authorities realized the currency reform was a failure. They tried to lower the level of restrictions on the markets by encouraging market transactions, allowing the usage of foreign currency and opening emergency stores. The North Korean economy has not been totally recover from the shock of the reform despite these several efforts.

From April to June 2010, as the transaction in the market regaining pre-reform level, rice prices showed a little bit of stability at least since May. Because of the economic policies, not only prices but also exchange rate fluctuated severely. Moreover, the prices varied significantly according to the regions.
On February, the rice price was about 500 Won per kilogram, but suddenly it rose about 1,500 Won per kilogram. Because of food imports from China and the usage of foreign currency, it decreased under 400 Won. Recently, it looks stabilized a little bit but there still exists instability and price difference between region as we can see the table blow.

Table: Rice Price

Some experts estimated currency reform policy made markets frozen across the country, but these North Korean markets have almost completely returned their pre-reform levels.
While markets looks busy, sales are still not recovering pre-reform levels. This is because not only did the reform devoid capitalist, but the several consecutive polices caused consumers severely limiting their ability to demand. Therefore, recent price stability could be less than ideal level.


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