The harsh impact of the COVID-19 pandemic will become evident soon with the world adding 88-115 million ‘new extreme poor people’ in 2020, a new World Bank report said, warning the number could cross 150 million by next year.
The biennial ‘Poverty and Shared Prosperity Report’ of the World Bank said it will be the first time in 20 years that global poverty rates will go up.
The #COVID-19 #Pandemic could force as many as 6 million more people into #poverty around #Europe and #CentralAsia. What can policymakers do to ensure people have access to adequate social protection and future job opportunities? Find our here: https://t.co/eClQTNwXjr pic.twitter.com/fro2PtB0nM
— World Bank Europe and Central Asia (@WorldBankECA) October 8, 2020
The addition of 88-115 million people to the list means a two times hike in the number of ‘new extreme poor’, as was estimated by the World Bank in April 2020. Six months ago, 40-60 million people were estimated to become extremely poor in 2020. It can be concluded that COVID pandemic has accelerated the world’s poverty growth rate.
The ‘new extreme poor people’ will be added to countries already having high poverty rates. Several middle-income countries will also see a big number of people slip below the extreme poverty line. In fact, about 82 per cent of the total ‘new extreme poor people’ will be in middle-income countries, the World Bank estimates.
Extreme poverty will hit the urban dwellers first, while the villages already share the burden of ‘extreme poverty’.
What the world would have been without COVID-19
Without the pandemic, the poverty rate would have dropped to 7.9 per cent in 2020, the World Bank report said.
On a positive note, global poverty had fallen at the rate of around 1% point per year between 1990 and 2015. A total of 52 million people were taken out of poverty between 2015 and 2017.
During 2012-2017, the growth was inclusive and the incomes of the poorest 40 per cent of the population grew.
In two-and-a-half decades (1990-2015), the extreme poverty rate declined by 26 percentage points. It dropped to 10 per cent from nearly 36 per cent.
While less than a tenth of the world’s population lives on less than $1.90 a day, close to a quarter lives below the $3.20 line and more than 40 per cent — almost 3.3 billion people — live below the $5.50 line.
However, COVID-19 has changed things for worse. Now, the average income of people is projected to decline and this will hit the poorest the most, says the World Bank report.
Average global shared prosperity may stagnate or even contract over 2019-2021 due to the reduced growth in average incomes, the report warned.
Policy intervention is the key to avert economic disasters in the post-COVID world. The crisis may lead to an increase in income inequality, resulting in a world that is less inclusive, the World Bank report stated.