Inflation and food two factors in North's deepening crisis

North Korean leader Kim Jong-un in 2018 on the left and in 2021 on the right. [KCNA]North Korea faces a deepening crisis of fluctuating currency and food prices due to international sanctions, continued restrictions on trade resulting from the Covid-19 pandemic and a declining agricultural harvest, according to a South Korean think tank’s report released June 23.“Analysis and Responses to the Third Plenary Meeting of the Eighth Session of the Korean Workers’ Party Central Committee,” the report by the Korean Institute for National Unification, highlights the twin problems of shortfalls in the North’s agriculture and an appreciating North Korean won vis-à-vis the Chinese renminbi and U.S. dollar.“A volatile situation where prices are still increasing despite a collapse in exchange rates in October continues,” the report says. “Whereas rice previously cost $0.50 to $0.60 per kilogram, the price has now risen to $0.90 to $1.40 per kilogram.”The report sees rising food prices as the consequence of a declining agricultural output, with the grain harvest in 2020 down 5.2 percent compared to the previous year.However, Japanese news outlet Asia Press, which relies on reports smuggled out of North Korea by market traders and business people, views the North Korean regime’s harsher restrictions on the use of foreign currency for purchases as the culprit behind inflation.“Initially, there was a lack of trust in the [North] Korean won, and everyone was trying to hold yuan and dollars to protect their assets. Still, with stricter controls on the use of foreign currencies, the yuan plummeted and became difficult to use,” the outlet reported on June 15.According to Daily NK, a website which tracks changes in North Korea, the North Korean won has risen approximately 30 percent against the dollar and 40 percent against the renminbi after the pandemic started.Kim Young-soo, professor of sociology at Sogang University, said of the current volatility, “The connected movements of foreign currency and grain prices has been severed. This is not a simple collapse — a serious disruption has occurred in the North Korean economic system.”As widespread hardship due to soaring food prices has been reported in North Korea, even North Korean leader Kim Jong-un has appeared in public in recent days, looking trimmer than usual.Photographs of Kim at recent Workers’ Party meetings shows that he has lost weight, with close-ups by online outlet NK News showing that the strap on Kim’s preferred luxury wristwatch has been tightened.Kim’s appearances have been accompanied on the North’s heavily censored state media by interviews with North Korean residents, who expressed their sorrow over the leader’s noticeable weight loss.“We were most heartbroken when we saw our dear general secretary had become emaciated,” said a middle-aged North Korea man, referring to Kim by one of his official titles. “Tears came out naturally.”Although the state of Kim’s health is normally a taboo topic in the North, the regime’s state media’s decision to run such interviews suggests that images of his slimmed-down appearance are part of a concerted propaganda effort to show that Kim is sharing in his people’s suffering.