The world is unlikely to meet the goal of ending extreme poverty by 2030 without history-defying economic growth rates for the rest of this decade, according to a new World Bank study. The study finds that COVID-19 dealt the biggest setback to global poverty reduction efforts since 1990 and the war in Ukraine threatens to make matters worse.
Poverty by 2030
According to the World Bank report, ‘Shared Poverty and Prosperity’, the world would not reach the proposed goal for 2030 of ending extreme poverty, since the pandemic generated a great setback that pushed 70 million people into this situation of vulnerability. In addition, the current economic scenario threatens to worsen the situation of extreme poverty in the world.
The year of the pandemic marked a historic turning point at the global level, as poverty rates had been declining until the start of the health contingency.
In 2021 poverty reduction resumed at a slow pace; however, World Bank projections show that this dynamic has stalled this year due to the war between Russia and Ukraine, rising food and energy prices, rising central bank interest rates , the slowdown in the economy and the devaluation of currencies due to the rebound of the dollar.
As a result, the war against poverty has suffered the biggest setback since the Second World War. According to the report, “These aftershocks changed the trajectory of poverty alleviation to make it bigger and longer. The goal of ending extreme poverty by 2030 has been lost.
Covid pushed 7 crore into poverty in 2020
The pandemic pushed an additional seven crore people into poverty in 2020. As a result, about 719 million people went below the international poverty line. These people are living on $2.15 a day. In other words, the poverty rate has increased from 8.4 per cent in 2019 to 9.3 per cent.
Even though the world is currently recovering from the pandemic, 685 million people will reach extreme poverty levels by the end of 2022 due to the war. The report estimated, “7 per cent of the world’s population, or 574 million people, will be living in extreme poverty by 2030.” This is more than double the rate of 3 per cent set in Sustainable Development Goal 1.
The inequality gap has also widened due to the pandemic. This is in contrast to the trend of the last several decades. Improvement in poverty, like recovery from the pandemic, is uneven. Developing and poor countries have increased the number of poor the most and the poverty level has worsened in these countries.
Poorest people paid price for pandemic
According to the report, “The poorest people have paid the biggest price for the pandemic. There has been a loss of 40 per cent in their income against an average of 4 per cent. Similarly, against the 20 per cent loss in the distribution of income of the rich, twice the loss has been done to the poor.
Latin America and the Caribbean occupy the fourth regional position in the world with the largest number of people living in extreme poverty, since 597 million people live in this condition. The first is East Asia and the Pacific, with 2.05 million people; followed by South Africa, with 1.79 million people; Sub-Saharan Africa, with 1.10 million people; Europe and Central Asia, with 494 million people; and the Middle East and North Africa, with 394 million people. For developing economies, the average rate of extreme poverty is 2.4 percentage points.
“What worries us most is the increase in extreme poverty and the decrease in shared prosperity caused by inflation, currency depreciation and the broader overlapping crises facing development. This spells a bleak outlook for billions of people around the world who do not outgrow the shock of 2020,” said World Bank President David Malpass.
Rate of extreme poverty will 7%
The objective proposed by the United Nations Organization was to end extreme poverty by 2030. However, after the passage of the pandemic and in the face of the current challenges of the global economy, this purpose is far from being achieved, so The World Bank projects that for that year the rate of extreme poverty will be 7%.
The study highlights that fiscal policies helped reduce the impact of the pandemic on poverty, which had adverse effects that are now evident in the increase in the countries’ fiscal deficits. The report notes that to reach the 2030 goal, each country would need to achieve GDP per capita growth of 9% per year in the rest of this decade.
“Macroeconomic policy adjustments are required to improve global capital allocation, foster currency stability, reduce inflation, and restart growth in median income. The alternative is the status quo: slowdown in global growth, higher interest rates, greater risk aversion and fragility in many developing countries”, concludes the entity’s analysis.
- What Is COP27, And Why Is It So Important?
- 5 Biggest Environmental Issues In India In 2022
- More Than 1,700 Environmental Activists Murdered In Past Decade