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Global poverty in the 2020s is on a new, worse course

COVID-19 has had a profound impact on health and well-being around the world. In this blog, we report updated nowcasts of global poverty up to 2022. Estimates of global poverty for the years up to 2019 are available in the World Bank’s Poverty and Inequality Platform (PIP). Our past projections of global poverty (for instance see here) used only the growth in average national income to project each household’s income. In this blog, we present estimates of global poverty allowing for differential growth across households within a country, featured in the 2022 Poverty and Shared Prosperity Report.  

The new estimates are based on a working paper by Mahler ⓡ Yonzan ⓡ Lakner (2022) where we utilize various data sources—namely household surveys from 2020, tabulated growth statistics from national statistical offices, high-frequency phone surveys (that were conducted during the COVID-19 pandemic), and country studies in the literature. With these data sources, we have projections that take into account distributional changes for 82% of the global population in 2020. For the remaining population, we use distribution-neutral per capita GDP-based projections for each country, similar to the earlier work. For 2021 and 2022, distributional data are not yet widely available, and thus, for these years we use distribution-neutral projections using per capita GDP growth forecasts (from the June 2022 Global Economic Prospects) for all countries.[1]

In addition to the nowcasted poverty series, we also report a counterfactual series that attempts to outline a trend for poverty in the absence of the pandemic. Predicting what would have happened now had the pandemic not happened is a difficult task, but the counterfactual series serves as a good guide to benchmark the observed poverty path since the start of the pandemic. To this end, we use pre-pandemic per capita growth forecasts available from the January 2020 GEP to estimate poverty for the counterfactual series for the years 2020-2022.

We find 71 million more people living in extreme poverty in 2020 compared to 2019—a 12 percent increase. On the contrary, without the pandemic, we would have expected close to 20 million people to move out of extreme poverty in 2020. As a result, the net impact of the pandemic has been to have an additional 90 million people in extreme poverty in 2020. Put differently, the net impact of the pandemic was to add more people to extreme poverty than the entire populations of Germany, or Turkey, or DRC. 

Figure 1: Largest shock to poverty in decades

The pandemic-induced change is the largest increase in poverty in over three decades (since household survey data have been widely available).  In terms of the number of poor (Figure 1), the COVID-19 shock is larger than the cumulative number of poor pushed into poverty during the Asian financial crisis – the only other increase in those past three decades. If we adjust for population growth, the COVID-19 shock is about 4 times as large as the one experienced during the Asian financial crisis.  The COVID-19-induced increase in extreme poverty could potentially be the largest increase since the Second World War.

In addition to the ongoing pandemic, many things have happened since the world shut down in 2020. Two global events that are still developing and have potentially negative implications for poverty are widespread inflationary pressures and the war in Ukraine. To account for this increased uncertainty, we also present a downside scenario for 2022. This scenario assumes that the higher food prices observed during the first half of 2022 affect the bottom of the income distributions more than the top in the short run (for a fuller discussion of the impact of increasing food prices on poverty see chapter 1 of the PSPR). Consistent with Artuc et al. (2022), we assign a 3-percentage point higher impact of food price increases on the incomes of the bottom 40% compared to those of the top 60%. We do this in a way that keeps the average national growth the same. In essence, the downside scenario attempts to capture additional distributional shocks due to higher food prices.

Figure 2: Nowcast of global extreme poverty

We find that poverty did fall in 2021, allowing for some recovery, but the pace of poverty reduction was similar to pre-pandemic trends and not nearly strong enough to reverse the increase in 2020; 42 million more people are still poor in 2021 compared to 2019.

In 2022, if all households within a country experienced income growth equally in line with growth in national accounts, then we expect 667 million people to be living in extreme poverty. This is equivalent to 70 million more than what was projected for 2022 before the pandemic. However, if high food prices affect the bottom of the income distribution more than the top, then we may see as many as 685 million people to be living in poverty. This is equivalent to 89 million more poor people than we had expected before the pandemic. This is almost the same as the 90 million added poor in 2020, meaning that slower growth and higher food prices are expected to have wiped out any gains made in 2021.

These projections tell us that two years after the pandemic, we have had little success in wiping out the historic increase in poverty due to the pandemic.  We are on a new, more challenging path, and more needs to be done if we are to correct the course that the pandemic has put us on. The just released  2022 Poverty and Shared Prosperity Report offers insights into how the course can be corrected through progressive and growth-inducing fiscal policies, and for those countries whose fiscal capacity has been severely depleted due to COVID-19 pandemic, fiscal support from other countries.

We gratefully acknowledge financial support from the UK government through the Data and Evidence for Tackling Extreme Poverty (DEEP) Research Programme.

[1] Indonesia is the only country where household survey data is available and used in 2021.


Nishant Yonzan

Economist, Development Data Group, World Bank

Daniel Gerszon Mahler

Senior Economist, Development Data Group, World Bank

Christoph Lakner

Program Manager, Development Data Group, World Bank

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