Global extreme poverty is expected to rise in 2020 for the first time in over 20 years, pushing an additional 88mn people into extreme poverty this year.
The World Bank expects some 115mn people around the world to be living in extreme property by this year-end, rising to 150mn by 2021, depending on the severity of the pandemic-induced economic contraction.
Extreme poverty, defined as living on less than $1.90 a day, is likely to affect between 9.1% and 9.4% of the world’s population in 2020, according to a World Bank report.
This would represent a regression to the rate of 9.2% in 2017. Had the pandemic not convulsed the globe, the poverty rate was expected to drop to 7.9% in 2020.
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% of the total will be in middle-income countries, the report estimates.
The World Bank expects global economic growth to shrink by 5% this year as nations deal with the pandemic. This has already led to millions losing their jobs and businesses failing, with poorer countries feeling the brunt.
Increasing numbers of urban dwellers are expected to fall into extreme poverty, which has traditionally affected people in rural areas.
Progress was slowing even before the Covid-19 crisis. New global poverty data for 2017 show that 52mn people rose out of poverty between 2015 and 2017. Yet despite this progress, the rate of reduction slowed to less than half a percentage point per year between 2015 and 2017.
Global poverty had dropped at the rate of around 1 percentage point per year between 1990 and 2015.
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 3.3bn 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% 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 coming years.
“The pandemic and global recession may cause over 1.4% of the world’s population to fall into extreme poverty,” said World Bank Group President David Malpass. “In order 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.
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