North Korea's Economy Grows 3.5% for Third Straight Year, but Gains Are Largely Confined to Pyongyang

SEOUL — North Korea's economy grew an estimated 3.5% in 2025, the third consecutive year of expansion above 3%, South Korea's central bank said, supported by closer ties with Russia and China. Satellite data show the capital, Pyongyang, glowing far brighter at night than a few years ago, but the gains remain narrow, and average incomes in the North are a small fraction of those in the South.

The Bank of Korea said in a report released July 31 that North Korean real gross domestic product grew 3.5% last year, following 3.7% growth in 2024 and 3.1% in 2023. "Expanded economic cooperation with Russia, increased trade with China and national policy projects helped North Korea post growth of more than 3 percent for three consecutive years," a bank official said. "In particular, the North's real GDP has surpassed its 2017 level, when United Nations sanctions were imposed," the official added, according to The Korea Times. The figures are the central bank's estimates rather than official North Korean statistics.

Mining and manufacturing accounted for 30.1% of the North's economy, services for 29.6% and agriculture for 21.2%, the bank said. North Korea's nominal gross national income was estimated at 48.5 trillion won, about $33.8 billion, in 2025, or just 1.8% of South Korea's 2,717.1 trillion won. Per capita, the North's income stood at 1.87 million won, about 3.6% of South Korea's 52.57 million won, or roughly one twenty-eighth. Some summaries of the data have conflated the two ratios, which measure different things: the North's total national income is 1.8% of the South's, while income per person is 3.6%.

Trade also expanded. A summary of the bank's data by BigGo Finance put total foreign trade at $3.13 billion in 2025, up 16% from a year earlier, with exports of $470 million, up 30%, and imports of $2.66 billion, up 13.9%. Those totals remain small, and the trade is heavily concentrated: China has historically accounted for nearly 95% of North Korea's trade, according to the BTI 2026 country report.

The Russia connection has drawn the most scrutiny. A March report by Lim Soo-ho, a senior research fellow at the Institute for National Security Strategy in Seoul, estimated that North Korea earned between $7.67 billion and $14.4 billion in hard currency from arms exports and troop deployments tied to Russia's war in Ukraine between August 2023 and December 2025, the Korea Times reported. The upper figure is the top of a range rather than a firm total. The report attributed about $620 million to troop deployments and between roughly $7 billion and $13.8 billion to exports of artillery, ammunition and missiles, The Defense Post reported. Only a small share of that income, between 4% and 19.6%, has been confirmed through observable data such as transfers in kind, according to the same summary, and the rest may be paid in forms that are difficult to track. Pyongyang is believed to have sent troops on four deployments since October 2024, involving more than 20,000 soldiers.

Lim said the implications reach beyond the North's balance of payments. "If North Korea fully collects payment for its troop deployments and arms exports, the key economic impact of sanctions, which is the reduction of hard currency earnings, is expected to be undermined," he said in the report.

The changes are most visible in the capital. An analysis published by the outlet Daily NK, which compared monthly average nighttime satellite imagery from April 2020 to April 2026, found that Pyongyang's lit area grew about 2.4 times and its overall brightness about 3.4 times. The added light was concentrated downtown, with nighttime light rising noticeably across 26.5% of the city's area, while the outskirts, accounting for 73.2% of the area, showed little or no change and remained dark. The period covers Kim Jong Un's project to build 50,000 apartments in Pyongyang between 2021 and 2026, which the analysis network 38 North has described as one of the biggest changes to the city.

A separate study by a team from KAIST and the Max Planck Institute for Security and Privacy tracked 178 cities, counties and districts between January 2022 and October 2025 and found average nighttime brightness rose 25.9%, with Pyongyang, Sinuiju, Kusong, Nampo and Wonsan posting the largest gains, the Korea JoongAng Daily reported. The gains were not steady, however. Overall illumination rose 26.2% from 2022 to 2023 but was flat, down 0.4%, between 2023 and 2025, meaning nearly all the increase came early in the period. Ahn Dong-hyun, a researcher at the Max Planck Institute who processed the data, said, "Nighttime illuminance can be viewed as a measure of actual economic vitality."

Other changes are tied to energy supply. Radio Free Asia reported in June that the border city of Sinuiju, once dark after 10 p.m., is now visibly bright as North Korea expands solar power. "But now, Sinuiju is very noticeably bright — there are apartment buildings and factories with their lights on from night through morning," said Park Jongchol, a professor at Gyeongsang National University who visited the Chinese city of Dandong across the river in early June. 38 North's June 2026 comparison found that Mongolia's capital, Ulaanbaatar, at 3.069, was still about 35% brighter on average at night than Pyongyang, at 2.274.

The picture that emerges is of growth with sharp limits. The video that prompted this report also cited smartphones and QR code payments becoming more common in Pyongyang; those claims could not be independently verified in the sources reviewed here. The Korea JoongAng Daily noted that the rise in nighttime brightness appears closely tied to South Korean military assessments that Pyongyang began supplying weapons to Russia in mid-2022, and that much of the electricity generated goes to Pyongyang and military-industrial cities rather than to ordinary residents. Bright lights and new towers in the capital are not the same as better living standards nationwide.

For now, the central bank's numbers show an economy that has recovered past its 2017 level despite sanctions, powered by a few sources of foreign income and directed toward a showcase capital. Whether marketization and the benefits of new income spread beyond Pyongyang, or remain concentrated there, will determine if the recovery reaches ordinary North Koreans.