North Korea’s shock economic boom: Where the money is coming from

For decades, North Korea was ranked alongside the world’s poorest places.

Then Kim Jong-un slammed the borders shut in 2020. Under crippling Western trade sanctions and pandemic-tanked tourism, the world’s most isolated state seemed destined to be forgotten by history.

But now, the regime is opening the doors to its first post-pandemic visitors. And they’re being greeted by something no one saw coming.

Neon-lit skyscrapers.

Luxury fashion.

Robot waiters.

Electric cars.

The once ghostly streets of Pyongyang are bursting to life.

The new North looks less Soviet flashback, more Shanghai cyberpunk. Which is a hell of a leap for a country not so long ago dismissed as a living 1950s museum.

The timing makes it even wilder.

Because the transformation comes while Australia vies to strangle the regime with sanctions – and as the rest of the West borders on recession. Even US President Donald Trump is suddenly singing a different tune on the regime.

So where is all the money coming from?

How did Kim Jong-un escape his economic noose?

And does it make him more dangerous?

‘Changed considerably’

With tourism still restricted, Brisbane tour guide Rowan Beard is one of the only Aussies to access the country since the pandemic.

Despite more than 100 visits to the secretive state, Mr Beard tells news.com.au he was stunned by what he found after touching down on a recent trip to work on the Pyongyang International Film Festival.

“What struck me most was how quickly the city had developed,” he said.

“The skyline had changed considerably, there were many more cars on the roads and life had become digitised. People now use phones for payments and booking taxis.”

Despite not having internet access – their state-made phones operate on a restricted national intranet – the number of mobile phone users in the North has boomed post-pandemic.

Citizens now enjoy the convenience of online banking, accessing state-run streaming platforms and using ride-booking apps.

But Justin Hastings, Professor of International Relations and Comparative Politics at the University of Sydney, tells news.com.au such phones remain tightly controlled.

“This control stops North Koreans from organising together outside the state, and stops information reaching them,” he said.

‘Symbolic power’

One night inside a flashy restaurant in the ultra-modern Hwasong District, Mr Beard was served by a robot waiter. It’s a stark contrast for a country that lost hundreds of thousands of lives to famine in the 1990s.

Hwasong is one of multiple districts stacked with glowing skyscrapers reaching for the clouds. Indeed, satellite data shows that North Korea is now about three times brighter at night than it was just five years ago.

Prof Hastings told news.com.au this building boom holds symbolic power.

“One of Kim Jong-un’s primary goals is economic development, and new buildings are the most visible symbol of progress,” he said.

Koryo Tours guide Gergo Vaczi was also “shocked” by another change he noticed on his return to Pyongyang.

“There’s been a massive influx of private cars, including electric and luxury vehicles,” he said.

Not so long ago, North Korea was starved of infrastructure, with few roads paved and even fewer cars to use them.

‘Doesn’t need the outside world’

Last year, New Zealand content creator and tour guide Benjamin Wetton led a group of tourists to the country’s northeastern city of Rason on the border of Russia and China.

While critics question if the nation’s current boom is exclusive to the elites, Mr Wetton said the regime’s building influx stretched deep across the country.

“There’s a clear, concerted effort to improve quality of life across the country, which is good for the local population,” he said.

“Not only are there new residential buildings, but a huge number of new quality of life projects like pools and gymnasiums.”

Zoe Stephens, manager at Koryo Tours, was also taken aback when she came to join the Pyongyang Marathon.

“We have people there we care about and we were all worried about what we’d find,” she said.

“What we saw told a different story. The middle class in Pyongyang is on the rise for sure. “You can see it in the people, how they act and dress.”

This makeover is driven by the rise in luxury fashion stores such as Daesong, which peddles designer fashion, watches and Western knock-off liquor.

Ms Stephens is compelled by North Korea’s underdog story.

The country has recorded three consecutive years of GDP growth of more than 3 per cent – numbers Australia could only dream of.

“Despite being more isolated than ever before and having all odds stacked against it, this is a growing economy,” she said.

“It’s proved itself as a power that doesn’t need the outside world.

“Or at least, one that only needs a few friends.”

Content creator George Devedlaka, who ran alongside Ms Stephens in the marathon, didn’t arrive with high hopes.

“I was quite nervous, after being warned of infrastructure issues like frequent power cuts. I wondered if I would ever return home,” she said.

“However, on the ground in Pyongyang there was a surprising sense of renewal. People seemed to have a decent standard of living.”

So much for being broke. The question is: who’s paying for it?

Proceeds of war

It all started when Russia invaded Ukraine in 2022.

While the war shot global food, fuel and fertiliser prices up, North Korea was a rare winner.

Bonded by mutual malice towards the West (and disregard for its rules), the regime threw all its arms and troops behind Russia.

Some 15,000 soldiers were deployed to battle alongside their rare allies. The number is set to swell to 50,000 this year.

Then came the artillery.

Kim Jong-un also fed half of Russia’s frontline munitions, including some 120 missiles and millions of artillery and mortar rounds.

Prof Hastings says this reveals something pivotal about the North’s financial strategy.

“Every part of their economy is built on escaping sanctions. The artillery sales are no exception,” he said.

How much are these sales worth? According to reports, they’ve earned the regime to the tune of $14 billion.

Prof Hastings said more than anything else, this buys breathing room.

“A richer, more technologically advanced North gives Kim more resources for weapons. It also makes him feel more secure,” he said.

“Even as he develops weapons, he may be less likely to feel cornered.”

But how sustainable is this growth in the future? With the war in Ukraine already lasting longer than WW1, only time will tell.

But one thing is certain now.

“Kim Jong-un will ride the wave with Russia as long as he can.”

Russia may have given North Korea a new economic artery, but China remains the key economic partner.

The two countries have continued strengthening their relationship, with North Korean exports to China including wigs, hair products and ore.

Two-way trade surged almost 20 per cent this year, reaching its highest level in years.

It’s unlocking the sanctions cage.

“China barely enforces sanctions now, and Russia has openly rejected all sanction recognition, which means the North has less work getting around them. As a result, it’s feeling its oats,” Prof Hastings said.

‘Modern-day pirates’

Another way Korea has shielded its economy against the West’s financial crash? Riding it.

Take one key income stream for the regime, a shadowy organisation known as Room 39 (not to be mistaken with Orwell’s Room 101).

Never heard of it? There’s a reason for that.

Room 39, also known as Office 39, is a highly secretive government unit designed to generate foreign wealth. It’s believed to be worth at least $5 billion.

Insiders say the profits come from arms and drug sales, hacking (stealing $2 billion in cryptocurrency in 2025), and North Koreans fraudulently working overseas.

This foreign scheme has hit Australia hard, with dozens of Aussie companies finding secret North Korean IT workers on their payrolls using fabricated identities and manipulated video software.

Prof Hastings said these modern day pirate activities are just the latest in a long line of entrepreneurialism from the North.

“The fundamental issue outsiders don’t understand about North Korea? That they’re incredibly entrepreneurial and flexible,” he said.

“They must be to survive.”

‘Still abysmal’

So is the boom really bringing prosperity to Kim’s people? Depends who you’re asking.

According to the UN, nearly half of its 26 million residents are still malnourished.

“Living standards are improving for some people,” Prof Hastings said.

“But they’re still abysmal for the general population.”

Nelson groom is a freelance writer. Learn more on his Instagram

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