►▼ Where is this data from?
As North Korea does not publish data on its foreign trade, research on North Korean trade depends on the use of statistics published by its trading partners, known as mirror statistics.
This chart is based on data from KOTRA (the Korea Trade-Investment Promotion Agency) for North Korea’s global trade, and also incorporates data from South Korea’s Ministry of Unification to account for inter-Korean trade (which KOTRA data excludes). KOTRA’s data is based on mirror statistics reported by GTIS Global Trade Atlas, with corrections for possible misreporting. For 2014 and 2015, these corrections include approximations of China's unreported crude oil exports to North Korea.
The inter-Korean trade figures reflected in this chart include historical trade at the Kaesong Industrial Zone, an inter-Korean export processing zone that was shut down in February 2016. Trade at this zone largely consisted of South Korean exports of raw materials and inputs, and North Korean exports of value-added goods produced at the zone; total cross-border trade volumes at Kaesong reached a peak of about $2.7 billion in 2015. International practices on the inclusion of export processing zone trade in national merchandise trade statistics have been inconsistent, but this chart opts for their inclusion.
►▼ How reliable is this data?
Due to a variety of factors — including North Korea’s secrecy regarding economic data, misidentification of North and South Korea by trading partners, and other forms of misreported or unreported data from North Korea's trading partners — these figures (particularly North Korean exports) should only be regarded as estimates. Additionally, there are general weaknesses with the use of mirror statistics, such as differentials in reported import/export valuations due to shipping and insurance costs, that this chart does not account for.
The KOTRA dataset used in this chart accounts for some of the deficiencies found in reported data (for example, by estimating the value of unreported Chinese crude oil exports to North Korea), but North Korean trade statistics remain inherently imprecise.
►▼ What explains North Korea’s persistent trade deficit?
North Korea is functionally frozen out of international credit markets, and its currency has roughly maintained its black market value since 2013 after experiencing severe inflation from 2009 to 2012; thus, it is unlikely that the country could maintain a trade deficit of the magnitude implied by reported data. Some North Korean exports — such as informal border trade, exports in services, and arms — go unreported. Remittances from laborers abroad, illicit activities, trading company activities abroad, and other sources, as well as foreign capital inflows and foreign assistance, may also account for this gap.
►▼ Why did North Korea's trade decline in 2016?
North Korea's 2016 trade decline can mostly be attributed to the February 2016 closure of the Kaesong Industrial Complex, which accounted for nearly all of inter-Korean trade. However, the Kaesong closure did not necessarily have as large an impact on the North Korean economy as the total trade figures might suggest, as most trade taking place via Kaesong consisted of North Korean imports of raw materials and inputs from South Korea, and North Korean exports of value-added goods produced at the zone. North Korea is generally estimated to have earned roughly $100 million annually from Kaesong during its peak years of production.
Although the UN Security Council adopted two resolutions in 2016 restricting North Korea's export of certain revenue-generating commodities (such as coal, iron, and other minerals), it does not appear that North Korean exports of these commodities in 2016 declined significantly due to these sanctions. (UN Security Council Resolution 2371, adopted August 2017, ended a "livelihoods" exemption which had previously allowed North Korea to continue its coal exports.) Falling commodity prices also contributed to a drop in North Korean trade in 2015.