Why North Korea’s economy could see a return to rapid inflation soon
News of plans for a government bond issuance suggests major price instability could be on the horizon
With the North Korean government set to borrow somewhere in the region of 60% of the value of its entire budget this year through its first bond issue since 2003, North Korea may see a return to rapid inflation like it saw in the 2001-2012 period.
If this actually happens it could have highly negative consequences for the economic outlook, with enterprises and entrepreneurs (Donju) set to be forced to finance this bond issue, which will likely have the effect of crowding out productive investment.
It’s still a big if as to whether the Kim Jong
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