Virus may push 150M people into extreme poverty

WASHINGTON—The coronavirus pandemic could push as many as 150 million people into extreme poverty by the end of 2021, wiping out more than three years of progress in poverty reduction, the World Bank said on Wednesday.

Releasing its flagship biennial report on poverty and shared prosperity, the multilateral development lender said an additional 88 million to 115 million people could fall into extreme poverty—defined as living on less than $1.90 a day—in 2020, and this could grow 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 be living under extreme poverty this year, about the same as 2017’s 9.2 percent and representing the first rise in the extreme poverty percentage in about 20 years.

The 2019 extreme poverty rate was estimated at 8.4 percent and had been expected to drop to 7.5 percent by 2021 before the coronavirus pandemic. Without swift, substantial policy actions, a long-standing goal of cutting the rate to 3 percent by 2030 looked out of reach, the report said.

Serious setback

“The pandemic and global recession may cause over 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 to development progress and poverty reduction.”

The report found that many of the new extreme poor were in countries with already high poverty rates, but around 82 percent of these are in middle-income countries, where the poverty line is defined as income of $3.20 a day for low-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 dry up from coronavirus lockdowns and reduced demand.

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

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

Stagnating income

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

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

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

“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,” Malpass said.