Pandemic Will Lead to Sharp Increase in Inequality, Columbia’s Sachs Warns
World poverty will rise for the first time in more than 20 years this year due to the detrimental impact of the pandemic, as well as climate change, World Bank experts warned..
Financial institution expects Covid-19 to plunge 88 million to 115 million people into poverty. By 2021, this figure could grow to 150 million, depending on the severity of the economic consequences of the epidemic..
An existence of less than $ 1.90 (€ 1.60) per day is considered extreme poverty.
Due to the pandemic this year, up to 9.4% of the world’s population can live in extreme poverty, which is 0.2% more than in 2017.
This will be the first regressive movement in this direction since 1998, when many Asian countries faced a deep financial crisis.
If not for the coronavirus outbreak, the poverty rate is expected to fall to 7.9% in 2020.
«Recovering from setbacks on poverty reduction progress will require countries to prepare for a new post-epidemic economy by allowing capital, labor, skills and innovation to shift to new businesses and sectors.», – said the President of the World Bank Group David Malpass.
However, he promised that lender support would be provided to developing countries. «as they work towards sustainable recovery».
Washington-based bank offers $ 160 billion in low-interest grants and loans to help more than a hundred of the world’s poorest countries deal with the crisis.
According to the experts’ report, the growth of poverty will be observed not only in countries with already high poverty rates. Selected middle-income regions will also see significant increases in extreme poverty. Analysts estimate that 82% of the total number of people living in poverty will live in middle-income countries.
The bank also stressed that while the coronavirus has a huge impact on all areas of activity, progress in reducing global poverty has slowed over the past few years. The annual decline was 0.5% between 2015 and 2017, compared with an annual decline of about 1% between 1990 and 2015..
In addition, the financial institution noted that although less than 10% of the world’s population lives on $ 1.90 a day, almost a quarter of the world’s inhabitants are forced to subsist on less than $ 3.20 (2.70 euros). More than 40% cannot afford to spend more than $ 5.50 (€ 4.70) per day.
These two thresholds represent the poverty line in lower and upper middle income countries.
The founder of Tiger Global Management earned $ 3 billion from the pandemic