COVID-19 Can Push 150 Million People Into Extreme Poverty: World Bank

More than 150 million people may fall into extreme poverty throughout the world by 2021 as a result of the economic contraction caused by the novel coronavirus pandemic, the World Bank said recently. It said the countries will have to prepare for a “different economy” post-COVID by allowing capital, labour, skills and innovation to move into new businesses and sectors. That is a devastating reversal after decades of progress, and higher than the bank previously estimated, even as recently as August, when the worst case was put at 100 million. And the bank’s new report estimates that by 2021, 150 million could be living below the extreme poverty threshold of less than $1.90 a day.

That would mean that 9.1-9.4% of the world’s population would be living under extreme poverty this year, about the same as 2017’s 9.2% and representing the first rise in the extreme poverty percentage in about 20 years. The 2019 extreme poverty rate was estimated at about 8.4% and had been expected to drop to 7.5% by 2021 before the coronavirus pandemic. The report said that without swift, substantial policy actions, a longstanding goal of cutting the rate to 3% by 2030 looked out of reach. “The pandemic and global recession may cause over 1.4% of the world’s population to fall into extreme poverty,” World Bank President David Malpass said in a statement, calling it a “serious setback to development progress and poverty reduction.”

Entitled Poverty and Shared Prosperity 2020: Reversals of Fortune (pdf), the report discusses the impacts of not only COVID-19 but also armed conflict and climate change, finding that the latter “may drive about 100 million additional people into poverty by 2030, many of whom reside in countries affected by institutional fragility and armed conflict, and where global extreme poverty is increasingly concentrated.”

The research also finds a rising share of those living in extreme poverty is in urban areas, which threatens to overwhelm existing support programs that are designed for rural populations. Instead of achieving the goal of eradicating poverty by 2030, the convergence of the COVID-19 pandemic with the pressures of conflict and climate change will put the goal “beyond reach without swift, significant and substantial policy action,” the World Bank said, warning that the global poverty rate could be about seven per cent in the next decade.

“The pandemic and global recession may cause over 1.4 per cent of the world’s population to fall into extreme poverty,” World Bank Group President David Malpass said. “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, labour, skills, and innovation to move into new businesses and sectors,” Malpass said.

In its report, the World Bank noted that the lack of recent data for India severely hinders the ability to monitor global poverty. Absence of recent data on India, one of the economies with the largest population of extremely poor, creates substantial uncertainty around the current estimates of global poverty, the Bank said.