Leader Kim Jong-un is likely to respond with aggression by ramping up his campaign of military provocation against the US with missile launches and nuclear tests, according to South Korea’s Institute for National Security Strategy (INSS) think-tank.

And the pot-bellied despot is also expected to continue his bloodthirsty purge of high-ranking army elites and government officials who will take the blame for the hermit state’s financial woes.

The INSS said: "In addition to further toughened sanctions, an increase in North Korea's investment in conventional forces in the aftermath of military pressure stemming from the Korean deployment of American strategic assets is forecast to hit the North Korean economy seriously sometime after March next year.

"March has been pinned for the timing for the United Nations Security Sanction Resolution 2375 adopted in September to take effect, given the UN sanctions committee's position that the effects of sanctions begin to be seen six to twelve months after their introduction.”

Despite expected economic difficulties, it remains to be seen whether North Korea will reverse its position clinging to nuclear weapons development, according to the think tank, which is the research arm of the Seoul’s National Intelligence Service.

It said: “North Korea may put further focus on building the economy while holding on to its policy line of becoming the most powerful nuclear state.” 

INSS chiefs expect North Korea to use South Korea's hosting of the 2018 PyeongChang Winter Olympics as an opportunity to offer dialogue with Seoul.

They also suggest leader Kim Jong-un could ramp up his military provocations if fence-mending attempt ends in failure and another intercontinental ballistic missile launch, a submarine-launched ballistic missile test or even a seventh nuclear test were all distinct possibilities.

On whether the North would join the 2018 Winter Olympics to be held in South Korea, the INSS said: "All the steps for participation have been completed except for Kim Jong-un's final decision."

Experts also forecast Kim will continue to ostracise and purge military elites and high-ranking government officials.

They said: "In the event of severe economic difficulties due to sanctions on North Korea, economic elites could possibly fall victim of purging as they are made to take responsibility.”

North Korean Premier Park Pong-ju could be possibly one of the targets.

South Korean spies said Hwang Pyong-so, previously chief of the General Political Bureau of the Korean People's Army, has been steeply demoted and is currently working at a government department.

Kim Won-hong, formerly deputy chief at the military bureau, is working at a farm without any possibility of reinstatement.

The national spy agency earlier said the two ranking military officials were punished for "impure" acts.