COVID-19 is wreaking havoc all across the globe, causing deaths, mental trauma, and pushing the world into economic despair. But, a much less talked about effect of this ongoing pandemic, is its huge impact on global poverty. It has pushed 40-60 million people into severe poverty. This number is hard to believe and even seems skeptical, however, it’s reality.
If we take a look at the data from the latest year of “PovcalNet (an online tool provided by the World Bank for estimating global poverty)”. It is shown that in 2020 the global poverty rate was supposed to reduce from 8.1% to 7.8% however with the pandemic hitting, it has unexpectedly risen to 8.6%. Comparing these COVID-19-impacted forecasts with the forecasts from the previous edition of the World Economic Outlook from October(2019) allows for an assessment of the impact of the pandemic on global poverty. Even though other factors may have also worsened countries’ growth outlooks, it’s safe to say that most of the changes in the forecasts are due to COVID-19.
These forecasts or predictions reveal that COVID-19 is going to cause the first major increase in global poverty since 1998 when the Asian Financial Crisis struck. With the new forecasts, global poverty (the percentage of the world’s population living on less than $1.90 per day) is projected to from 632 million people to 665 million people.
When that is compared with the projected decline from 8.1% to 7.8% over the same years using the previous World Economic Outlook forecasts, we know that it means that COVID-19 is causing a shift in our 2020 estimate of the global poverty rate of 0.7 percentage points. It was supposed to go from 8.1%-7.8%(0.3 percentage points but is instead going from 8.2%%-8.6%(0.4 percentage points). Another way of saying this is that estimates suggest that COVID-19 will push 49 million people into extreme poverty in 2020.
The places where the virus is hitting the hardest mostly depends upon two factors. The influence of the virus on the economic activity of a country and the number of people living close to the international poverty line. The IMF(International Monetary Fund) projects that future economies will drop by 6% in 2020 while emerging markets and developing economies will drop by 1%. Yet with more people living close to the international poverty line in developing countries, low and middle-income countries will suffer the most in terms of poverty. And though Sub-Saharan Africa hasn’t been facing horrible circumstances by the virus with aspects to health. Projections show that it will be the region affected most, in terms of increased poverty. 23 million of the people pushed into poverty are expected to be in Sub-Saharan Africa and 16 million in South Asia.
As we can see COVID-19 has not only been destroying countries for reasons due to health but with so much more including the social standing of our world.
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