MacroscopeDownturn in China may bring dire consequences for North Korea

Of all the pressures North Korea faces, none is perhaps as threatening as the prospect of a full-blown recession in China, which would have a crippling effect across the border.

After several years of moderate growth, North Korea’s economy looks to be having a bad year. That is partly because of Pyongyang’s Ebola quarantine, the weather and, more recently, the panic of millions of investors in China.

First, the Democratic Republic of Korea’s Ebola quarantine policy dragged on well into this year, only ending in March after five months. This policy required anyone entering the country to undergo a 21-day quarantine and ended up amounting to a travel ban. Very few foreigners could devote that amount of time to living in a North Korean hotel room. Certainly, anyone without an investment already on the ground was strongly dissuaded from visiting.

This hurt trade and tourism immediately, and while they are rebounding, the longer-term impacts are perhaps yet to be felt. After all, it simply adds to the long-held perception that North Korea is not a sound investment destination at a time when Pyongyang is taking other steps to promote itself as exactly the opposite.

As the Ebola policy ended, the consequences of a meteorological conspiracy began to take effect. North Korea is facing a drought; Pyongyang has called it the most severe in a century. The dry weather has already caused short-term economic hardship this year, disrupting electrical output and human resource management in the spring.

The majority of the republics electricity comes from hydropower. The country is famously data-shy, but it submitted to the United Nations that between 2005 and 2009, six thermal power and eight hydropower plants were producing electricity. The late winter and early spring is when snow melts and runoff swells the rivers and should be time of relative electrical bounty in the country.

This spring, power cuts were instead more frequent and longer than in recent years. Foreigners resident in Pyongyang reported that even in the centre of the capital, they were relying almost 100 per cent on fuel-run generators for power. (Usually they rely on far less than 50 per cent.)