Poverty and Shared Prosperity 2020: Reversals of Fortune provides new data and analysis on the causes and consequences of the first reversal in poverty reduction in two decades. It identifies policy principles countries can use to counter it. The report presents new estimates of COVID-19’s impacts on global poverty and inequality. Harnessing fresh data from frontline surveys and economic simulations, it shows that pandemic-related job losses and deprivation worldwide are hitting already-poor and vulnerable people hard, while also partly changing the profile of global poverty by creating millions of “new poor.” Furthermore, the report breaks ground by jointly analyzing three factors whose convergence is driving the current crisis and will extend its impact into the future: the COVID-19 pandemic, armed conflict, and climate change.
Transcript
Mel Fleury: Maybe you’ve heard the terms “global poverty” or “extreme poverty” before and don’t know what they actually mean. Poverty is a broad concept that seems hard to define. Reports show numbers and percentages about it around the globe, but what does it actually mean to be extremely poor?
Welcome to the Poverty Podcast, produced by the World Bank’s Poverty and Equity Global Practice. I’m your host, Mel Fleury.
On today’s episode we’ll be looking at extreme poverty around the globe through the lens of the Poverty and Shared Prosperity Report, produced by the World Bank every two years. This year, poverty economists faced an important challenge when tallying numbers, accomplishments and downfalls in the development scenario: COVID-19.
But first, let’s start with an overview.
From our headquarters in Washington, D.C, it’s hard to see poverty from my window, or even during my commute to work. But being born and raised in the capital of Brazil, I am used to seeing poverty daily.
Lack of access to clean water, to proper food, to sewage systems, to clothing and footwear and baby formula. Crowded buses full of commuters, standing for over two hours while the bus speeds through potholes on the road. Kids selling candy at every traffic light or asking to “guard” your car while it's parked on the street.
Carolina Sánchez-Páramo: Poverty is not a poor country phenomenon; there are poor people in every country. There are poor people in rich countries, there are poor people in Europe, in the U.S. – countries that we usually don't associate with the idea of poverty, even though I think COVID, you know, has made us realize that a lot of people are actually very vulnerable right now.
Mel: That’s Carolina Sánchez-Páramo, the Global Director of the Poverty and Equity Global Practice here at the World Bank. Carol helped me understand extreme poverty a little better. I’ll walk you through what we talked about.
According to guidelines set by the World Bank, anyone living on less than one dollar and ninety cents per day is in extreme poverty. They may be unable to afford basic food, shelter, health care, and clothing. So when we say extremely poor, we are talking about people living on less than one dollar and ninety cents.
Over the last 30 years, there has been remarkable progress toward eradicating
extreme poverty. Data for 2017 show that almost 690 million people were still living under the poverty line around the world. But, for a few years now, economists have been seeing a slowing trend in poverty reduction. Global extreme poverty had dropped by around 1 percentage point per year between 1990 and 2015. But between 2015 and 2017, it fell by less than half a percentage point per year. So poverty reduction has been slowing down for a few years now.
Carol: And that's very worrisome to us.
Even more worrisome is the fact that it's slowing down the most in the countries where we have either high levels of poverty or large numbers of poor. And those are primarily countries in Sub-Saharan Africa. And this is in contrast to what has happened in the rest of the world, where we've seen extreme poverty declining very fast. So as a result, we now live in a world that it's almost like a two-speed world, with huge progress in some areas and very limited progress in Sub-Saharan Africa.
Mel: Of course now, on top of that, we have to consider the effects of the COVID-19 pandemic, which is already having a dramatic effect in global poverty.
The crisis is still evolving, but so far, the World Bank is predicting that COVID could push an additional 88 to 115 million people into extreme poverty. That represents almost one third of the population of the United States.
This means that COVID-19 is expected to cause the worst setback in global poverty reduction in a generation: it is the first increase in world poverty since 1998.
Carol: We also see that these impacts are materializing really fast, much faster than during any other economic crisis. Economies are being closed down. And that's putting a lot of people out of work overnight. And you know, when you are a poor family, you don't have savings, or when you are a vulnerable family, you don't have savings. So if you can't work, your income immediately goes to zero. You don't have money in the bank that now you can use to continue to buy food or clothes or to pay your rent. And that's why we have seen these immediate poverty impacts, right. You can think of this as you're closing a tap and the moment that the water stops flowing, you know, everybody's immediately falling into poverty because they don't have any, any other sort of cushion that they can rely on.
Mel: But the coronavirus is also bringing a new kind of poor into the picture. Most people falling into poverty because of the pandemic look different from the existing poor. In 2017, the poor were predominantly rural, young, and undereducated, with four out of every five people below the international poverty line living in rural areas.
But people coming into poverty because of the pandemic tend to be more concentrated in urban areas. These people are more likely to be employed in the non-agricultural sector, in informal jobs or to be self-employed, in contrast with the extreme poor before COVID, who are traditionally employed in agriculture.
Many of the new poor will be concentrated in countries that are already struggling with high poverty rates, but middle-income countries will also be significantly affected. The two countries with the highest projected number of new poor due to COVID-19 are India and Nigeria, both lower-middle-income countries.
And this brings extra challenges to governments around the globe.
Carol: Safety net programs and other programs that governments use to provide support to the poor, obviously in the past have tailored the existing poor and have tailored and targeted areas where these existing poor lived, which means that these programs are better suited to provide support in rural areas and to those that are employed in the agriculture sector, but not necessarily to provide support to these new poor that are likely to emerge from COVID. So we have a dual challenge of, you know, a large number of new poor, and poor that look different from the existing poor. And therefore, that may undermine the effectiveness of existing policies to provide them with quick support.
Mel: But thinking about global poverty is not as simple as coming up with a number. Poverty is not just a monetary value or simply the inability to afford food. In 2018, the World Bank introduced a multidimensional poverty measure, broadening the concept of poverty around the world to include more dimensions of well-being.
During surveys, when economists asked monetarily poor people how they felt poor, the answers broadly focused on a wide variety of deprivations. Many said they felt poor by not having enough to eat, eating the same kind of food often, having inadequate roofing material, being sick, having limited or no formal education, having no work, living in unsafe neighborhoods, not engaging in recreational activities.
And this is what we will be exploring in this podcast: the multiple faces of poverty and what we can do about it as citizens of the world. The numbers are here to help us come up with strategies and policies, but our actions matter the most.
Carol: We live in a world with enough resources, in fact, more than enough resources and [if] those resources were adequately distributed, we could end poverty tomorrow, right? So, this is not a dream. I mean, it could be a reality.
If I imagine that world, I think it's a world where, you know, everybody has enough to eat and they can drink clean water and have access to health services. Where all children can go to school and receive a high-quality education where working adults have access to economic opportunities. You know, the kind of economic opportunities that are created by economic growth. And then it’s a world where families are protected against risks.
Mel: A world where people are protected against risks.
This is our episode for today. Make sure to follow us on Twitter for regular updates, at WBG_ Poverty.
We’ll be back here soon with more updates on poverty, stories, data and analysis from the World Bank Group and its staff around the globe.
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Goodbye!
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