North Korea likely to explore possibility of talks with U.S. in 2018

"North Korea may continue to advance its nuclear and missile capabilities while searching for an outlet externally," the ministry said in its predictions for North Korea in 2018. "In searching for the recognition of its status as a de facto nuclear-possessing state, (the North) would explore the possibility of negotiations with the U.S."

At the same time, the North is also likely to attempt to engage with South Korea in order to restore inter-Korean relations next year, it also said. It added that the ministry will closely watch North Korean leader Kim Jong-un's New Year address on Jan. 1 to see if it alludes to such possibilities.

For this year, North Korea has distanced itself from dialogue and engagement with South Korea as it attempted to work out its relationship with the U.S. ahead of that with the South, according to the ministry.

Next year, North Korea is expected to start to feel the pinch of international and bilateral sanctions on the country's nuclear and ballistic missile programs, the ministry said.

"North Korea is forecast to maximize efforts to endure (the impact of sanctions) by tightening social control and mobilizing its people for building the economy," the ministry said. It predicted the sanctions' economic ramifications may start to show in 2018, with effects including cuts in trade volume and foreign currency inflow, as well as reduced production in each part of the economy.

North Korea's economy has already faced the impact of international sanctions, with foreign countries reducing imports of North Korean workers as well as humanitarian assistance to the North, according to the Unification Ministry.

North Korea's exports to China, its largest trading partner, tumbled 31.7 percent to US$1.6 billion in the January-November period, compared to a year earlier. The overall North Korea-China trade volume in the January-November period dropped 10.2 percent on-year to $4.67 billion, according to the ministry data.

Rice prices and the U.S. dollar-North Korean won exchange rate remain relatively stable with one kilogram of rice being sold at around 5,000 won and one U.S. dollar exchanged for some 8,000 won recently. But they are currently showing signs of rapid price changes, the ministry noted.

Gas prices in North Korea have risen about two to three times since early this year, it also said, indicating United Nations Security Council sanctions' tightening grip on North Korea's oil procurement.