Decades of progress in reducing extreme poverty slowed and then stopped, according to a World Bank report published in early October.
The number of people experiencing extreme poverty – currently defined as subsisting on less than $2.15 US per day, which is up from a definition of $1 US per day in 1990 – was cut in half between 1990 and 2015, with over one billion people exiting these conditions.
However, progress began to slow after 2015, with the COVID-19 pandemic and subsequent global economic slowdown bringing progress to a halt. In 2020, 9.3% of the world’s population was living in extreme poverty, up from 8.4% in 2019.
“In 2020 alone, the number of people living below the extreme poverty line rose by over 70 million. That is the largest one-year increase since global poverty monitoring began in 1990,” the report said. This marks only the fifth year since 1950 when extreme poverty has increased.
There has been significant progress since 1990, when 38% of the world lived in extreme poverty to 2019 when 8.4% did. Nevertheless, the report noted that in 2019 nearly half (47%) of the world’s population was living in poverty when defined as subsisting on less than $6.85 US per day.
Though government interventions in the form of stimulus funds, cash transfers and social safety net investments helped blunt the impact of the pandemic, these were more effective in middle-to-high-income nations than they were in lower-income countries. In addition, lower-income nations have experienced a slower economic recovery from the pandemic than higher-income nations.
When looking only at the poorest 40% of the global population, it is estimated that there was an 11% increase in extreme poverty in 2020, rising from 648 million to 719 million. This resulted in the 0.9% increase to 9.3% in extreme poverty among the entire world population, when it had been projected to decline by 0.3%.
“By the end of 2022, as many as 685 million people could still be living in extreme poverty. This would make 2022 the second-worst year for poverty reduction in the past two decades (after 2020),” the report said.
If current trends hold, the World Bank projects that 7% of the global population (around 574 million people) will be living in extreme poverty in 2030, well above the 3% goal.
“Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth,” said World Bank Group President David Malpass in a press release announcing the report. “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.”