The world was already significantly off course on the global goal of ending extreme poverty.
new economic orthodoxy. That crash necessitated massive state bailouts of systemic banks and industries, financed on the back of taxpayers and leading to falling living standards, steep rises in equality in some of the world’s richest nations and dramatic political consequences with the triumph of right- wing populism. Correspondingly, as funds became scarce efforts in poverty reduction were scaled back. Between 2015 and 2020, poverty reduction slowed to 0.6 percent per year, "the slowest rate over the past three decades", according to the World Bank. As a result, "the world was already significantly off course on the global goal of ending extreme poverty.” The consequences of that crisis were far from over (they still are not) when the COVID-19 pandemic, first registered in China in December 2019, further exposed the fragility and vulnerability of the globalization model. The worldwide public health crisis plunged the global economy into the deepest recession since World War II with a fall in output of 5.2 percent in 2020, according to the World Bank. The closure of borders led to unprecedented supply disruptions memorably symbolized by the giant container ship Ever Given, which ran aground in the Suez Canal in March 2021, blocking this vital route of global trade and causing worldwide disruption. However, the means to combat the crisis were very unevenly distributed: While, for instance, Germany was able to respond to the pandemic with three fiscal packages totaling 10.3 percent of GDP, Gabon only found funds equaling 0.83 percent of GDP for COVID-19 related spending (with additional plans for 1.2 percent GDP), according to IMF data. The pandemic also dealt the hardest blow in decades to the fight against poverty. According to the UN SDG Report 2022, for the first time in a generation the number of people in extreme poverty is increasing. Between 2015 and 2018, global poverty continued its historical decline, with the extreme poverty rate falling from 10.1 percent to 8.6 percent. The number of people living on less than US$1.90 a day dropped from 740 million to 656 million over this period.
performance as well as the deepening impacts of climate change could push that number even higher, to 95 million, leaving the world even further from meeting the target of ending extreme poverty by 2030. While the projected number of people living in extreme poverty in 2022 before the pandemic was 581.3 million, it now stands at 676.5 million. This places 2022 as the second- worst year for poverty reduction in the last 22 years after 2020. Several years of progress have been lost. Given these trends the World Bank is clear in its assessment: “The global goal of ending extreme poverty by 2030 [will] not be achieved”, it says in its Poverty and Shared Prosperity Report 2022. According to the Bank’s calculations 574 million people – nearly 7 percent of the world’s population – will still be living in extreme poverty (now calculated at US$2.15 a day as opposed to US$1.90 when the SDGs where agreed in 2015) in 2030. While the UN has a zero target, the World Bank – perhaps more realistically – had aimed for a 3 percent target. Today neither seems attainable. But the world is not only off course when it comes to ending extreme poverty. The World Bank report shows that in 2019 nearly half of the world’s population (47 percent or over 3 billion people) lived in poverty when measured as living on less than US$6.85 a day.
The World Bank
COVID-19 has made a severe dent in that progress. Nowcasts suggest that the global poverty rate increased sharply from 2019 to 2020, from 8.3 percent to 9.2 percent, the first rise in extreme poverty since 1998 and the largest since 1990. This erased more than four years of steady gains. It also means that an additional 93 million people worldwide were pushed into extreme poverty during the pandemic. The year 2020 marked a historic turning point – an era of global income convergence gave way to global divergence. Little progress has been made since then in catching up to the pre-COVID trend. Forecasts for 2022 estimate that 75 million more people than expected prior to the pandemic will be living in extreme poverty. This is the largest one-year increase since global poverty monitoring began in 1980. Rising food prices and the broader impacts of the war in Ukraine, sluggish global growth and China’s weak
The container ship Ever Given, which ran aground in the Suez Canal in March 2021
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