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The novel coronavirus disease (COVID-19) pandemic is likely to drive around 40-60 million people to extreme poverty, according to a report published by the United Nations Conference on Trade and Development (UNCTAD) on May 13, 2020.
Global poverty — the share of the world’s population living on less than $1.90 (Rs 143.41) per day — is projected to increase to 8.6 per cent (665 million people) in 2020, from 8.2 per cent (632 million people) in 2019, the report pointed out.
The report — prepared with the collaboration of 36 international organisations — said this unprecedented increase in global poverty was not seen since 1998, when the world witnessed the after-effects of the 1997 Asian financial crisis.
The report, titled How COVID-19 is changing the world: A statistical perspective, comes amid a sharp decline in the global economy. This is because most parts of the world remain locked down to enforce social-distancing and, as a result, help curb the spread of COVID-19.
Families will be pushed deeper into poverty as the current employment decline was the biggest since the second World War, the report said.
According to the report:
Twenty-three million people will be pushed into extreme poverty in sub-Saharan Africa, while 16 million will suffer extreme poverty in south Asia.
The International Monetary Fund (IMF)’s World Economic Outlook in April projected advanced economies to contract by around six per cent in 2020 while emerging markets and developing economies to contract by one per cent.
Low- and middle-income countries will suffer the greatest consequences in terms of extreme poverty, according to the report.
“Though sub-Saharan Africa, so far too was hit relatively less by the virus from a health perspective, our projections suggest it will be the region hit hardest in terms of increased extreme poverty,” the report said.
There was also an unprecedented shock witnessed by labour markets, with the total number of hours worked estimated to drop by 10.5 per cent in the current quarter, according to the International Labour Organisation (ILO). This was equivalent to 305 million full-time workers with 48-hour work weeks.
“The drop in hours worked already outpaced that of the 2008-2009 financial crisis. Worryingly, COVID-19 is also impacting the developing world, where capacities and resources are severely constrained,” the report said.
Eighty-one per cent of the global workforce lived in countries with mandated or recommended workplace closures, in the beginning of April, according to the report.
Their share decreased to 68 per cent by April 22, driven mainly by the lifting of such closures in China. The situation elsewhere, however, worsened.
There is typically some delay in drop of economic activity that translates into a drop in employment, said the report. “But in the current crisis, the impact on employment was immediate and sweeping, as a result of lockdowns and other measures,” it said.
“The employment drop implies that numerous workers around the world are facing or will face a loss of income, in many cases leading them and their families to (deeper) poverty,” the report added.
The impacts of COVID-19 will be severe and compound existing inequalities, said the report, talking about those who were ‘financially insecure’.
Those who are not income poor (that is, their income net of taxes is above half of the median income of their countries), but have insufficient liquid financial wealth to support them at the level of the income poverty line for more than three months, are said to be ‘financially insecure’.
The report used the latest household survey data for 166 countries from PovcalNet (an online tool provided by the World Bank for estimating global poverty). It extrapolated projections from the World Economic Outlook.