North Korea could reap the benefits of a free market
The second meeting between President Trump and North Korean Leader Kim Jong Un could set the stage for the liberalization of the North Korean economy and perhaps lead to a day where the UN lifts it’s the crippling cap on refined petroleum products and crude oil that North Korea import, but more importantly give North Koreans to have a desire to drive the open road.
The possibilities are endless. We have seen it before. Once a former communist state starts opening up their economy and starts embracing more capitalistic principles it seems everyone wants cars. Cars are a sign of a of status in the emerging middle class and a sign that the driver has “made it. In North Korea, hardly any one of the 25 million North Koreans have cars and if history is any judge, once they start reaping the benefits from an emerging free market, they are all going to want one.
Take Vietnam, President Trump used the free market embracing Vietnam as an example of what could happen if you embrace capitalistic principles.” The President tweeted “Vietnam is thriving like few places on earth. North Korea would be the same, and very quickly, if it would denuclearize. The potential is awesome, a great opportunity, like almost none other in history, for my friend Kim Jong-Un. We will know fairly soon - Very Interesting!”
Vietnam is thriving because they embraced capitalism open up their markets and allowed private ownership for business and cause a desire by the Vietnamese to want to buy cars. In Vietnam most folks traveled by bicycles and motorcycle but now that is starting to change. In 1999 in Vietnam, cars sales were barley 8000 cars for the entire year. But as their economy exploded the desire for four wheels grew and sales hit annual sales 288,683 units in 2018
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It is not just Vietnam. Just think back in 1999 when China really started to make capitalistic economic reforms. China had more bikes than cars and sales in China were under 1 million units. As they opened up their economy and the middle class grew car sales exploded to where sales just a selling to where over 30 million vehicles in a year. So while the population of North Korea may be small the addition of more cars will increase demand expectations for gas an oil going forward. It will also give them the feeling Americans get when they get behind the wheel, but with probably less traffic. It also may be a sign of a better life for North Koreans that have suffered for too long under economic repression.
Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn Learn even more on our website at www.pricegroup.com.PFlynn@pricegroup.com.