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Corona will make 150 million people extreme poor by 2021: WB

by BQ News Bureau
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Global extreme poverty is expected to rise in 2020 for the first time in over two decades as the disruption of the Corona pandemic compounds the forces of conflict and climate change, which were already slowing poverty reduction progress, the World Bank said on Thursday.

The COVID-19 pandemic is estimated to push an additional 88 million to 115 million people into extreme poverty this year, with the total rising to as many as 150 million by 2021, depending on the severity of the economic contraction. Extreme poverty, defined as living on less than $1.90 a day, is likely to affect between 9.1 per cent and 9.4 per cent of the world’s population in 2020, according to the biennial Poverty and Shared Prosperity Report. This would represent a regression to the rate of 9.2 per cent in 2017. Had the pandemic not convulsed the globe, the poverty rate was expected to drop to 7.9 per cent in 2020.

“The pandemic and global recession may cause over 1.4 per cent of the world’s population to fall into extreme poverty,” said World Bank Group President David Malpass. “To reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-COVID, by allowing capital, labour, skills, and innovation to move into new businesses and sectors.”

The report also finds that many of the new poor will be in countries that already have high poverty rates. A number of middle-income countries will see significant numbers of people slip below the extreme poverty line. About 82 per cent of the total will be in middle-income countries, the report estimates.

The convergence of the COVID-19 pandemic with the pressures of conflict and climate change will put the goal of ending poverty by 2030 beyond reach without swift, significant and substantial policy action, the World Bank said. By 2030, the global poverty rate could be about 7 per cent

Increasing numbers of urban dwellers are expected to fall into extreme poverty, which has traditionally affected people in rural areas.

In addition to the $1.90-per-day international poverty line, the World Bank measures poverty lines of $3.20 and $5.50, reflecting national poverty lines in lower-middle-income and upper-middle-income countries.

While less than a tenth of the world’s population lives on less than $1.90 a day, close to a quarter of the world’s population lives below the $3.20 line and more than 40% of the world’s population – almost 3.3 billion people – live below the $5.50 line.

The COVID-19 crisis has also diminished shared prosperity – defined as the growth in the income of the poorest 40 per cent of a country’s population. Average global shared prosperity is estimated to stagnate or even contract over 2019-2021 due to the reduced growth in average incomes. The deceleration in economic activity intensified by the pandemic is likely to hit the poorest people especially hard, and this could lead to even lower shared prosperity indicators in the coming years.

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