Covid-19 Fuels World’s First Rise in Extreme Poverty Since 1990s
Global extreme poverty is expected to increase this year for the first time since the Asian financial crisis more than two decades ago as the coronavirus pandemic builds on the existing impacts of conflict and climate change, the World Bank said.
Covid-19 is forecast to push an additional 88 million to 115 million people into extreme poverty in 2020, with the total rising to as many as 150 million by the end of 2021, the World Bank said in a report on Wednesday. The Washington-based development lender defines extreme poverty as living on less than $1.90 a day.
While extreme poverty has typically affected people in rural areas, it’s expected to have an impact on an increasing number of city residents, the World Bank said. Eight out of 10 people who fall into extreme poverty will be in middle-income countries, the bank 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, labor, skills, and innovation to move into new businesses and sectors,” World Bank President David Malpass said in a statement. The lender “will help developing countries resume growth and respond to the health, social, and economic impacts of Covid-19,” he said.
The World Bank and International Monetary Fund will hold their annual meetings next week, moving to a virtual format due to the outbreak. The Group of Seven industrialized economies have joined the Bretton Woods institutions in calling on the larger Group of 20 to extend a freeze in debt payments from the world’s poorest nations struggling with Covid-19.
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