The economic shock wrought by the coronavirus pandemic will push up to 150 million people into extreme poverty by 2021, the World Bank warned Wednesday.
For the first time in two decades, the number of people living on less than $1.90 a day has significantly jumped, as the world also grapples with the simultaneous challenges of climate change and conflict.
In its report Poverty and Shared Prosperity 2020: Reversals of Fortune, the World Bank outlines how prospering middle-income countries have seen their economic gains vanish in a matter of months. As many as 115 million could fall into extreme poverty by the end of 2020.
An overwhelming 80 percent of so-called “new poor” from mostly Asian and African countries are bearing the brunt as economies around the world buckle under the stress of lockdowns and social restrictions.
The report’s lead author, Carolina Sanchez, told RFI the “new poor” differ from the “pre-existing poor” in that they are slightly more educated people who live in urban centres and work in the informal sector.
“We suspect there may be people who have not been poor before … who haven't really experienced poverty in their lives … who are now being pushed into poverty,” she says.
While extreme poverty traditionally affects people in rural areas, increasing numbers of urban dwellers are falling into this group.
“These are people who when they lose their jobs don't have any coping mechanisms – they don't have savings, and they don't have access to credit,” Sanchez adds.
New data in the report shows how poverty reversal gains made in some of the fastest-growing economies have been eradicated for the first time in a generation.
Anti-poverty goals threatened
With the global recession brought by coronavirus exposing deep inequalities, and with exiting policies falling short, the World Bank says 7 percent of the global population now risks falling into poverty over the next decade.
Unless “swift, significant and substantial policy action” is taken to tackle the trifecta of crises – climate, conflict and Covid-19 – the goal of ending poverty by 2030 will be out of reach.
Existing development policies targeted at the rural poor and largely focused on supporting agriculture will need to be adapted to account for the shifting poverty demographic, World Bank Group president David Malpass says in the report.
“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, labor, skills and innovation to move into new businesses and sectors.”
Gains already eroded
While global poverty dropped by about 1 percent a year between 1990 and 2015, climate change and conflict had already started to chip away at those gains before the Covid-19 crisis flared up.
“What we see here are several forces converging to slow down and reverse progress,” Sanchez explains. “On the one hand, we have fragility, conflict and climate – which have been unfolding over a period of time and which are extremely harmful for the poor – and then comes Covid.”
The poverty projections for 2020, and 2021 are the result of a massive shock triggered by Covid – which Sanchez says has now been added to an older set of underlying forces.
Solving poverty means working out a development agenda that includes “mutually reinforcing” solutions that suit both immediate and long-term goals, she adds.
“There's no doubt that the urgent issue at hand is to put a stop to Covid-19 and to recover in a sustainable way from the economic crisis that it has unleashed."