10th October 2020
The coronavirus pandemic has caused catastrophe on multiple levels. From illnesses and deaths to the reform of social dynamics, COVID-19 has undoubtedly negatively affected the world.
The return to a new sense of normal has come with many countries realizing that their economies are in no state to halt economic activity for months at a time, fund medical facilities to minimize the loss of life, and provide relief packages for those affected by the slowing of economic activity.
The World Bank has realized this and calculated that as many as 150 million people could be pushed into extreme poverty by the end of 2021, the equivalent of reversing more than three years of progress in poverty reduction globally.
The biennial report on poverty and shared prosperity by the financial body revealed that an additional 88 million to 115 million people will end up living on less than $1.90 (R31.27) a day in 2020.
This estimates to almost 10% of the world's population would be living in extreme poverty this year.
To compare, the extreme poverty rate in 2019 was estimated at 8.4% and was expected to drop to 7.5% by 2021 before the coronavirus pandemic.
"The pandemic and global recession may cause over 1.4% of the world’s population to fall into extreme poverty. This is a serious setback to development progress and poverty reduction," said World Bank President David Malpass ina statement.
A portion of the new extreme poor countries already had high poverty rates, but 82% of them are middle-income countries where the poverty line is defined as an income of $3.20 (R52.67) a day for low-middle-income countries and $5.50 (R90.52) for upper-middle-income countries.
The World Bank report also found that increasing numbers of urban dwellers have been thrown into extreme poverty as jobs dry up from coronavirus lockdowns and a general decrease in demand.
Sub Saharan Africa was identified as having the highest concentration of people living on less than $1.90 a day, which could increase to over 50 million people by 2021. The study showed that about 42% of the region's population could be living in extreme poverty by 2021.
The bank pointed out that income inequality and social mobility would increase and decrease, respectively.
"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," advised Malpass.