World Bank: Extreme poverty here to stay
October 5, 2022
The World Bank released a new "Poverty and Shared Prosperity" report Wednesday, outlining progress in the global fight to end extreme poverty. The report called the coronavirus pandemic a historic turning point that halted decades of poverty reduction.
According to the World Bank, an international developmental lending institution, 2020 saw 71 million more people living on $2.15 (€2.18) a day or less (the new standard benchmark for extreme poverty), bringing the overall total to 719 million people — about 9.3% of the global population — and signaling the biggest single-year leap in more than 30 years.
World Bank analysts say the situation has now become even bleaker as Russia's war in Ukraine, as well as China's flagging economy, inflation, and rising food and energy prices further threaten to impede progress into the future.
The report, said World Bank President David Malpass, highlights the need for major growth-boosting policy reforms.
World Bank estimates 7% of global population will live in extreme poverty in 2030
"Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth," said Malpass. He cited "inflation, currency depreciations, and broader overlapping crises" as fueling further poverty.
The report noted that without a massive hike in economic growth, some 574 million people — roughly 7% of the global population — would still be living in extreme poverty in 2030.
Economists noted that 60% of all extreme poverty was to be found in sub-Saharan Africa, which has an overall poverty rate of 35%.
Coronavirus 'biggest setback'
Malpass said that in order to avoid a worsening of the situation, countries needed to engage in more cooperation, end broad subsidies, and focus on long-term growth rather than short-term gains.
Though the report cited the coronavirus pandemic as the "biggest setback" to decades of global poverty reduction, it noted that progress had slowed considerably in the five years leading up to it — with income losses in poor countries twice as high as in wealthy ones, further increasing global financial inequality.
The World Bank report also documented instances in which government assistance had softened the blow of poverty while at the same time pointing out that developing nations had far fewer resources at their disposal, thus thwarting efforts aimed at poverty reduction.
"Over the next decade, investing in better health and education will be crucial for developing economies," said World Bank Chief Economist Indermit Gill. The report called on wealthy countries to raise revenues by increasing property and carbon taxes, thus allowing them to replenish state coffers without further burdening the poor.
Overall, global poverty fell from 38% in 1990, when the World Bank began monitoring it, to 8.4% in 2019. The pandemic, however, triggered the first extreme poverty increase in more than 20 years.
Wednesday's report concluded that the goal of eradicating extreme poverty by 2030, remains out of reach.
js/sms (AFP, Reuters)