South Asia has been one of the world’s success stories in terms of rapid economic growth. With India leading the way, South Asia’s poverty rate has fallen from 60 percent in 1981 to 40 percent in 2005. However, during the same period, the number of poor people—those living on less than $1.25 per day—actually increased from 549 million to 595 million over the same period.
Earlier this month, Japan experienced one of the worst natural disasters in its history, an earthquake and subsequent tsunami that claimed the lives of thousands of people and drastically changed the lives of countless more. Sadly, this tragedy is another in a string of natural disasters that have occurred over the past few years, such as the earthquakes in Haiti and Chile, wildfires in Russia, and floods in Pakistan, West Africa, Sri Lanka, Brazil, and Australia.
Professor Barry Eichengreen (left) and
Increasing food and oil prices are making life miserable for millions of people. According to our World Bank estimates, the food price hike since last July has already pushed another 44 million people around the globe into extreme poverty –those living on less than US$1.25 a day.
Commodity prices are experiencing a lot of volatility right now, with food and oil prices nearing record highs. But what about the medium-term? The answer is fundamental for developing countries as commodity prices will be the key external variable for them to watch—perhaps even more than interest rates. Commodity prices are expected to stay high until at least 2015, before supply responses and lower relative demand by a burgeoning global middle-class moderate them.