North Korea's economy has moved past a period of contraction and entered a phase of gradual recovery, driven by deepening ties with Russia and China, according to a report released by South Korea's unification ministry. The assessment, included in Seoul's five-year plan for inter-Korean relations covering 2026 to 2030, represents one of the most detailed official South Korean analyses of the North's economic trajectory in recent years.

Pyongyang's expanding cooperation with Moscow has been a central factor. Since Russia launched its full-scale invasion of Ukraine in 2022, North Korea has drawn significantly closer to the Kremlin, with analysts noting that the North has been supplying troops and ammunition in exchange for economic support and military technology transfers. Ties with China — long the diplomatically isolated country's primary economic backer — have also visibly warmed. Air China resumed direct flights between Beijing and Pyongyang in March after a six-year suspension, and daily passenger rail services between the two capitals have restarted. China's foreign minister, during a visit to Pyongyang last week, said Beijing hoped to further "promote practical cooperation."

The ministry noted that North Korea is also seeking to boost its "strategic autonomy" and "negotiating leverage" by exploiting the intensifying rivalry between China and the United States, while simultaneously strengthening diplomacy with countries historically sympathetic to the Pyongyang regime. North Korea does not publish official economic data, but Seoul estimates its nominal gross domestic product stood at around $30 billion in 2024 — a small fraction of South Korea's, one of the most developed economies in the world.

The recovery comes against a backdrop of decades of hardship. Rigid socialist economic planning, heavy military spending, and sweeping international sanctions — imposed in response to Pyongyang's nuclear and missile programmes — have long suppressed growth. A famine in the mid-1990s killed hundreds of thousands, and the COVID-19 pandemic pushed many more into extreme hunger. In February, North Korean leader Kim Jong-un told a landmark party congress that the country had overcome its "worst difficulties" of the past five years and was entering a stage of "optimism and confidence in the future."

Why this matters: the recovery signals that international sanctions have been significantly blunted by Pyongyang's pivot toward Moscow and Beijing, complicating Western-led efforts to use economic pressure as leverage over North Korea's nuclear programme. The new inter-Korean plan, drafted by the administration of President Lee Jae-myung, enshrines a policy of "peaceful coexistence" with the North — a notable shift in tone from the previous government's approach.