SEOUL (Reuters) – Kim Jong Un’s ambitious new plan for the next five years is aimed at developing North Korea’s shattered economy, but the proposals may falter in the face of major crises that have already stalled the young leader’s current projects.
In remarks released this weekend, Kim blamed international sanctions as well as unanticipated crises including the coronavirus pandemic and natural disasters, for preventing the government from improving people’s lives, while criticising officials for mistakes that needed to be fixed.
He proposed becoming less dependent on imports, growing nearly every industry, and reforming the way officials work.
However, the new plan is unlikely to turn around the growing decay of the North Korean economy, making it difficult for Kim to deliver on his lofty promises and potentially cutting the resources available for treasured military projects, said Chad O’Carroll, CEO of Korea Risk Group, which monitors North Korea.
“(There is) no apparent interest in reform, sanctions relief, or an opening of the economy,” he said in a post on Twitter.
Since Kim came to power in 2011, standards of living improved for many North Koreans as markets proliferated and consumer goods became more widely available. But now the country is facing the most challenging situation since a famine in the 1990s, and projects such as tourist resorts, economic zones, and a large hospital appear stalled.
Kim’s decision to stage a huge congress and talk of ambitious projects in the face serious shortages for many North Koreans shows how the government has “internalised its own propaganda,” said Leif-Eric Easley, a professor at Ewha University in Seoul.
“The country’s economic and social conditions are worse than many outsiders appreciate,” he said. “Kim tells his people about domestic shortfalls and promises improvements but is unlikely to adjust policies to receive aid and assistance.”
ECONOMIC WISH LIST
The plan – which includes proposals for more advanced nuclear weapons – appears to be doubling down on North Korea’s “Byungjin,” or parallel development policy, said Kang Dong-wan, professor of Political Science & Diplomacy at Donga University in Busan.
“North Korea is going back to its 2017 plan – dual policy of improving its nuclear deterrent and self-reliant economy,” he said.
The new five-year plan includes a long wish list for expanding almost every category of industry, from metal and chemical production to coal mining, tourism, modernized railways, and more public transit.
North Korea plans to invest in tidal and nuclear electricity plants as well as “zero-carbon buildings and zero-energy buildings in keeping with the world trends of architectural development”, while the country’s mobile communication networks should become “next-generation” as soon as possible.
At least 50,000 apartments are to be built in the capital of Pyongyang, and another 25,000 dwellings in the Komdok area, which is home to major mining operations.
Kim called for the capacity to produce 8 million tons of cement to support the large building projects.
‘THE STATE’S LEADING ROLE’
Improving the economy can’t depend solely on solving outside problems and will only be possible after “breaking with current wrong ideological viewpoint, irresponsible working attitude, incompetence and obsolete working manner,” Kim said.
North Korea’s economy shifted away from being fully centralised after many private markets and business sprung up in the face of government failures to provide in the 1990s.
Analysts say those markets are here to stay, but there are signs the government is reasserting itself in ways that effectively roll back or curtail at least some of those reforms.
“The important tasks… is to restore the state’s leading role and control in the overall commerce service activities and preserve the nature of socialist commerce serving the people,” Kim said.
(Reporting by Josh Smith; Additional reporting by Cynthia Kim; Editing by Lincoln Feast.)
(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday.
The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”
The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last.
“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”
Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry.
Read More: A Resilient Global Economy Masks Growing Debt and Inequality
Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year.
“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”
The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.
China Overcapacity
“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.
“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.
A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.
US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.
Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.
(Updates with additional Georgieva comments from eighth paragraph.)
The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
Author of the article:
Bloomberg News
Jonathan Ferro and Christopher Condon
Published Apr 18, 2024 • 2 minute read
Article content
(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday.
Article content
The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”
Advertisement 2
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
Exclusive articles from Barbara Shecter, Joe O’Connor, Gabriel Friedman, Victoria Wells and others.
Daily content from Financial Times, the world’s leading global business publication.
Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
Daily puzzles, including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
Exclusive articles from Barbara Shecter, Joe O’Connor, Gabriel Friedman, Victoria Wells and others.
Daily content from Financial Times, the world’s leading global business publication.
Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
Daily puzzles, including the New York Times Crossword.
REGISTER / SIGN IN TO UNLOCK MORE ARTICLES
Create an account or sign in to continue with your reading experience.
Access articles from across Canada with one account.
Share your thoughts and join the conversation in the comments.
Enjoy additional articles per month.
Get email updates from your favourite authors.
Sign In or Create an Account
or
Article content
The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last.
“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”
Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry.
Read More: A Resilient Global Economy Masks Growing Debt and Inequality
Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year.
“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”
The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.
China Overcapacity
Advertisement 3
Article content
“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.
“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.
A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.
US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.
Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.
(Updates with additional Georgieva comments from eighth paragraph.)
Comments