The World Bank, yesterday, said that the effect of coronavirus pandemic could push about 49 million people into extreme poverty.
The global financial powe house said that casting global poverty is not an easy task as it requires assumptions about how to forecast growth and how such growth will impact the poor, along with other complications including how to calculate poverty for countries with outdated data and those even without data.
“All of this goes to say that estimating how much global poverty will increase because of COVID-19 is challenging and comes with a lot of uncertainties.
A statement obtained from the bank’s website, said that although it is difficult to estimate poverty, it used household survey data and growth projections from 166 countries.
“Here we’ll try to answer the question using household survey data and growth projections for 166 countries.
“In particular, we take data from the latest year for which PovcalNet (an online tool provided by the World Bank for estimating global poverty) has poverty estimates for a country and extrapolate forward using the growth projections from the recently-launched World Economic Outlook, in which global output is projected to contract by 3 per cent in 2020. This approach assumes that countries’ growth accrues equally to everyone, or in other words that COVID-19 does not change inequality within countries.
“Comparing these COVID-19-impacted forecasts with the forecasts from the previous edition of the World Economic Outlook from January allows for an assessment of the impact of the pandemic on global poverty. Of course, other factors may have also worsened (or improved) countries’ growth outlooks between January and April but it’s safe to say that most of the changes in the forecasts are due to COVID-19” the bank, said.
Such forecasts, according to World Bank, reveal that COVID-19 is likely to cause the first increase in global poverty since 1998 , when the Asian Financial Crisis hit.
With the new forecasts, the bank said, global poverty—the share of the world’s population living on less than $1.90 per day—is projected to increase from 8.2 per cent in 2019 to 8.6 per cent in 2020, or from 632 million people to 665 million people.
“Compare this with the projected decline from 8.1 per cent to 7.8 per cent over the same period using the previous World Economic Outlook forecasts. The slight change from 8.2 per cent to 8.1 per cent for 2019 happens because the revised growth forecasts also changed for non-COVID reasons for some countries. Taking this into account, it means that COVID-19 is driving a change in our 2020 estimate of the global poverty rate of 0.7 percentage points — (8.6 per cent-8.2 per cent)-(7.8 per cent-8.1 per cent). Another way to put this is that the estimates suggest that COVID-19 will push 49 million people into extreme poverty in 2020,” the world apex bank said.
Source: sunnewsonline
