The World Bank says the world is unlikely to meet the goal of ending extreme poverty by 2030, according to a new World Bank study.
This is contained on the World Bank website on Thursday which elaborated that this is due to absent history-defying rates of economic growth over the remainder of this decade.
It said the study found that COVID-19 dealt the biggest setback to global poverty-reduction efforts since 1990, and the war in Ukraine threatens to make matters worse.
The statement said the bank’s latest Poverty and Shared Prosperity Report provides the first comprehensive look at the global landscape of poverty in the aftermath of the extraordinary series of shocks to the global economy over the past few years.
“It estimates that the pandemic pushed about 70 million people into extreme poverty in 2020, the largest one-year increase since global poverty monitoring began in 1990.
“As a result, an estimated 719 million people subsisted on less than 2.15 dollars a day by the end of 2020.’’
The statement said the new report was the first to provide current and historical data on the new global extreme-poverty line, which had been adjusted upward to 2.15 dollars a day to reflect the latest 2017 purchasing-power-parity data.
“Extreme poverty fell dramatically across the world from 1990 through 2019, the latest year for which official data are available.
“But progress slowed after 2014, and policymakers now confront a tougher environment: extreme poverty is concentrated in parts of the world where it will be hardest to radical, in Sub-Saharan Africa, in conflict-affected areas and rural areas.’’
The statement said Sub-Saharan Africa now accounts for 60 per cent of all people in extreme poverty at 389 million, more than any other region.
It said the region’s poverty rate is about 35 per cent, which is the world’s highest.
“To achieve the 2030 poverty goal, each country in the region would need to achieve per-capita Gross Domestic Product (GDP) growth of nine per cent per year for the remainder of this decade.
“That is an exceptionally high hurdle for countries with per-capita GDP growth averaged 1.2 per cent in the decade before COVID-19.’’
The statement quoted the World Bank Group President, David Malpass as saying “progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth.”
“Of concern to our mission is the rise in extreme poverty and decline of shared prosperity brought by inflation, currency depreciations, and broader overlapping crises facing development.
“It means a grim outlook for billions of people globally. Adjustments of macroeconomic policies are needed to improve the allocation of global capital, foster currency stability, reduce inflation, and restart growth in median income.’’
Malpass said the alternative was the status quo in many developing countries, which includes slowing global growth, higher interest rates, greater risk aversion, and fragility.
The statement said Indermit Gill, World Bank’s Chief Economist and Senior Vice-President for Development Economics was quoted as saying “over the next decade, investing in better health and education will be crucial for developing economies.
“This is in view of severe learning losses and health-related setbacks they suffered during the pandemic.
“In a time of record debt and depleted fiscal resources, this will not be easy. Governments will need to concentrate their resources on building human capital and maximising growth.”
It said the report finds that national policy reforms could help restart progress in reducing poverty. Stepped-up global cooperation would also be necessary.
The statement said in fiscal policy, governments should act promptly on three fronts, first, “they should avoid broad subsidies and increase targeted cash transfers’’.
“Half of all spending on energy subsidies in low- and middle-income economies goes to the richest 20 per cent of the population who consume more energy.
“Cash transfers are a far more effective mechanism for supporting poor and vulnerable groups.’’
The statement said the second front was for governments to focus on long-term growth.
“High-return investments in education, research and development, and infrastructure projects need to be made today. In a time of scarce resources, more efficient spending and improved preparation for the next crisis will be key.’’
It said the third front was for governments to mobilise domestic revenues without hurting the poor.
“Property taxes and carbon taxes can help raise revenue without hurting the poorest. So can broadening the base of personal and corporate income taxes.
“If sales and excise taxes do need to be raised, governments should minimise economic distortions and negative distributional impacts by simultaneously using targeted cash transfers to offset their effects on the most vulnerable households.’’
