World Bank: Covid-19 to push 150 million into extreme poverty

8 Oct 20

Extreme poverty is set to rise around the world for the first time in more than 20 years as Covid-19 continues to weigh on the global economy, the World Bank has warned.

 

It has estimated that between 88 million and 150 million more people will be living on less than $1.90 per day by the end of 2020, depending on the severity of the economic contraction, leaving the total at around 700 million.

That would represent the undoing of four years of extreme poverty reduction.

Most (82%) of these newly impoverished people are expected to be living in middle-income countries, with the largest increase expected in Sub-Saharan Africa.

“In order to reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-Covid, allowing capital, labour, skills and innovation to move into new businesses and sectors,” said World Bank group president David Malpass.

The report suggested that pressures from Covid-19 will converge with other forces, such as conflict and climate change, and will put the international community’s stated goal of ending extreme poverty by 2030 “beyond reach without swift, significant and substantial policy action”.

But progress was already slowing before the pandemic. Between 1990 and 2015, global poverty dropped at about one percentage point each year, but between 2015 and 2017 slowed by more than half.

“Failure to act comprehensively now will create even bigger challenges in the future, especially for the poorest,” the report said.

“Some of the policies and delivery mechanisms needed to achieve these priorities, such as social protection systems, are already in place. For example, efforts are well under way in Brazil and Indonesia to expand existing cash transfer programmes.”

Countries also need to be willing to find and test potential solutions quickly, the World Bank said, to reverse the trend, but the report stressed they will need the financial means to do so.

It recommended that debt forgiveness should be extended to low-income countries to enable them to expand their responses.

“Crafting and implementing a more economically just, socially inclusive, and politically legitimate development process – as a necessary complement to the adoption of technically sound policies – provides the world its best chance of reversing today’s reversals of fortune,” the report said.

“However, reversing even a massive reversal of fortune, such as the world is experiencing with Covid-19, is necessary, desirable, and possible. It has been done many times in the past, in the face of what were regarded at the time as insurmountable challenges – for example, eradicating smallpox, ending World War II, creating national parks, closing the hole in the ozone layer – and it will be done again in the future.”

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