Analysts: Inflation, exchange rates stabilizing in North Korea

Feb. 4 (UPI) -- Inflation and exchange rates could be stabilizing in North Korea, a sign the country's economy is holding steady despite heavy sanctions, according to South Korean analysts.

Jeong Hyung-gon, a senior research fellow at Seoul's Korea Institute for International Economic Policy, said the stabilization of key North Korean economic indicators could mean sanctions may not be the solution to getting Pyongyang to denuclearize, Newsis reported Tuesday.

"The negative consequences of sanctions could amplify and economic hardships could increase," Jeong said. "But that does not mean North Korea Chairman Kim Jong Un will change his nuclear negotiation tactics or his strategy of nuclear development."

Jeong also said the United States cannot exclusively rely on sanctions to push North Korea toward denuclearization.

"That thinking needs to change," Jeong said.

Jeong, the author of an economic review of North Korea's performance in 2019, published by the Korea Development Institute on Tuesday, also said North Korea-China trade last year remained at a level similar to that of the late 2000s.

Choi Ji-young, a researcher at Seoul-funded Korea Institute for National Unification, also said North Korea's economy is stable despite sanctions. Grain prices may not be fluctuating owing to active intervention from North Korean authorities, Choi said.

Choi added correlation between North Korea's exchange rate and the international market is weakening.

"This may be a result of the expansion of [North Korea's] trade deficit, and a sign North Korea's market is cut off from the international market as trade has been significantly decreased due to strengthened sanctions," Choi said in a 2019 economic outlook for North Korea.

North Korea has long relied on China for trade. Economic activity between the two countries has been growing in the double digits, according to official Chinese statistics.

China's General Administration of Customs on Tuesday published data on total imports and exports between the two countries, which grew 19.6 percent from January to December of 2019 from the previous year.

Total trade is about $1.3 billion for 2019, according to South Korean news agency Yonhap.