The Poverty and Shared Prosperity 2020: Reversals of Fortune report

 The Poverty and Shared Prosperity 2020: Reversals of Fortune report

Findings:

• Poverty reduction has suffered its worst setback in decades, after nearly a quarter century of steady global declines in extreme poverty.
  
  
• The report discusses early evidence that the pandemic is deepening income inequality, threatening inclusive economic recovery and future growth.
  
  
• Global economic growth is predicted to fall by 5.2 percent in 2020, the largest drop in eight decades. The shock may have a prolonged impact on investment levels, remittances flows, the skills and health of the millions now unemployed.
  
  

Poverty numbers:

• The pandemic and global recession may cause over 1.4 per cent of the world's population to fall into extreme poverty. Thus, around 9.1% to 9.4% of the world will be affected by extreme poverty in 2020.
  
  
• If the pandemic had not occurred the poverty rate was expected to drop to 7.9% in 2020.
  
  
• It is estimated that an additional 88 million to 115 million people would fall into extreme poverty this year, with the total rising to as many as 150 million by 2021, depending on the severity of the economic contraction.
  
  
• Extreme povertyrefers to an income below the international poverty line of $1.90 per day, set by the World Bank.
  
  

Factors driving increased poverty:

• The report jointly analyzes three factors that are driving this increase in global poverty and that threaten to extend its effects in the future: COVID-19, armed conflict, and climate change.
  
  
• Climate change may drive about 100 million additional people into poverty by 2030, many of whom reside in countries affected by armed conflict, and where global extreme poverty is increasingly concentrated.
  
  

Distribution of poverty:

• Many of the newly poor individuals will be from countries that already have high poverty rates. The report estimates that, about 82 per cent of the total will be in middle-income countries.
  
  
• Sub-Saharan Africa, with 27-40 million new poor, and South Asia, with 49-57 million, will be badly hit.
  
  
• This uneven impact means the crisis is likely to increase inequality within countries in the longer term, which will make it more difficult for countries to generate inclusive growth in the future.
  
  
• People forced into poverty by COVID-19 may also differ from the current global poor in other ways.
  
  
• Within countries, a large share of the extreme poor are rural, whereas many of the new poor are likely to live in congested urban settings.
  
  
• Many of the new poor are likely to be engaged in informal services, construction, and manufacturing—the sectors in which economic activity is most affected by lockdowns
  
  

 

Lack of data in India

• As the Indian government decided not to release the 2017-18 All India Household Consumer Expenditure Survey data from the 75th Round, there is an important gap in understanding poverty in South Asia.
  
  
• A number of results in the report are incomplete, or uncertain because of the lack of data from India which, as per the report, accounted for 139 million of the 689 million people living in poverty in 2017.
  
  

 

Way Ahead

• 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, labour, skills, and innovation to move into new businesses and sectors.
  
  
• Nations must look to reengage with a longer-term development agenda that includes promoting sustainable and inclusive growth, investing in human capital, and improving the quality of public administration and services.
  
  
• Safety net programs will need to adopt innovative targeting and delivery mechanisms, in particular to reach people in the informal sector in both rural and urban areas.
  
  
• Countries will also need to consider the changing profile of poverty and vulnerability as they invest in jobs.
  
  
• Policy options may include providing grants and wage subsidies to firms to minimize layoffs, supporting micro and small enterprises through measures such as tax exemptions and grants.
  
  
• Thus, achieving the goal of ending extreme poverty by 2030 will require significant, swift, and sustained action to boost inclusive growth in countries where extreme poverty persists.
  
  

 Social Issues