The virus can drive 150 million people into extreme poverty

WASHINGTON – The coronavirus pandemic could push 150 million people into extreme poverty by the end of 2021, ending more than three years of progress in reducing poverty, the World Bank said Wednesday.

Releasing its flagship biennial report on poverty and shared prosperity, the multilateral development lender said that an additional 88 to 115 million people could fall into extreme poverty, defined as living on less than $ 1.90 a day, in 2020, and this number could rise to 111 million. to 150 million by the end of 2021.

That would mean that 9.1-9.4 percent of the world’s population would live in extreme poverty this year, roughly the same as 9.2 percent in 2017 and representing the first increase in the percentage of extreme poverty at about 20 years.

The 2019 extreme poverty rate was estimated at 8.4 percent and was expected to fall to 7.5 percent by 2021 before the coronavirus pandemic. Without swift and substantial political action, the long-standing goal of reducing the rate to 3 percent by 2030 seemed out of reach, according to the report.

Serious setback

“The pandemic and the global recession may cause more than 1.4 percent of the world’s population to fall into extreme poverty,” World Bank President David Malpass said in a statement, calling it “a serious setback for the development progress and poverty reduction “.

The report found that many of the new extreme poor were in countries with already high poverty rates, but about 82 percent of these are in middle-income countries, where the poverty line is defined as an income of $ 3 , 20 a day for people of lower middle income. countries and $ 5.50 a day for upper-middle-income countries.

While extreme poverty has been concentrated in rural areas in the past, the World Bank report found that increasing numbers of urban dwellers have been thrown into extreme poverty as jobs run out due to coronavirus lockdowns. and demand reduction.

Sub-Saharan Africa has the highest concentration of people living on less than $ 1.90 a day and could see an increase of more than 50 million people by 2021 compared to precoronavirus estimates.

About 42 percent of the region’s population could be living in extreme poverty by 2021 compared to a pre-COVID estimate of 37.8 percent, the study showed.

Stagnant income

The coronavirus has also stalled “shared prosperity,” defined as rising incomes for the poorest 40 percent of a country’s population. From 2012 to 2017, income for this group increased by an average 2.3 percent in 74 of the 91 economies for which data was available, the World Bank said.

The COVID-19 crisis could now reduce the incomes of the poorest 40 percent, increasing income inequality and reducing social mobility, the bank said.

To get back on the path of poverty reduction, countries will need collective action to control the virus, provide support to households and build more resilient economies once the pandemic subsides, he said.

“Countries will need to prepare for a different economy after COVID, allowing capital, labor, skills and innovation to move into new businesses and sectors,” said Malpass.

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