This is the second blog in a series about how countries can make progress on the interlinked objectives of poverty, shared prosperity and the livable planet. For more information on the topic, read the 2024 Poverty, Prosperity, Planet Report.
When the Sustainable Development Goals (SDGs) were set in 2015 there was a sense of optimism that eradicating extreme poverty was possible by 2030. A decade later, in the middle of a global polycrisis, we live in a very different world. As outlined in the World Bank’s Poverty, Prosperity, and Planet Report, which was launched last week, the world has seen multiple and overlapping crises in the last decade relating to COVID-19, higher sovereign debt, conflict, and extreme weather events linked to climate change. These crises have affected the poorest countries and people disproportionately, such that the prospects for poverty reduction until 2030 look grimmer than ever before, when compared to previous Poverty and Shared Prosperity Reports (2016, 2018, 2020, 2022).
Figure 1 shows extreme poverty rates for the world, country groups, and regional groups, in the last four decades, as well as forecasted rates to 2030, the target year of the SDG1 (“Ending poverty everywhere in all its forms”). Between 1994 and 2004, the extreme poverty rate fell from about a third to a quarter of the world’s population, despite population growth. Progress in the following decade (2004-2014) was even more remarkable; extreme poverty more than halved to 11%.
Figure 1: Extreme poverty by country and regional grouping
This progress was mainly driven by today’s upper-middle-income countries, such as China and Indonesia (in East Asia), and, to a lesser extent, lower-middle-income countries, such as India (in South Asia). With per capita growth rate exceeding 9% a year, China in particular is responsible for this progress. By 2014, extreme poverty in China was estimated at less than 2%, leaving limited scope for China to reduce extreme poverty further.
In the last decade, the success in reducing extreme poverty slowed down significantly, with extreme poverty falling by only 2.5 percentage points to 8.5% between 2014 and 2024. Progress was disappointing in countries eligible to receive assistance from the International Development Association (IDA) and lower-middle-income countries, while it even reversed in low-income and fragile and conflicted-affected countries. Most of these countries are in Sub-Saharan Africa and the Middle East and North Africa. With the current growth projections in these poor countries and regions, global extreme poverty is predicted to be as high as 7.3% by 2030, which is more than twice the World Bank’s target of 3%.
Overlapping crises have slowed or stalled poverty reduction
The slow progress on poverty reduction in the past years reflects global conditions characterized by multiple and overlapping crises or a “polycrisis”. A polycrisis refers to multiple and interconnected crises occurring simultaneously, where their interactions amplify the overall impact. The scarring effects of the pandemic, slow economic growth, increased conflict and fragility, and insufficient progress on shared prosperity, for instance, are connected and have been behind the slow progress in poverty reduction. The risk of a polycrisis is growing due to heightened uncertainly, fragility, climate change, and other vulnerabilities that tie together diverse sectors and regions.
1. The COVID-19 pandemic caused a historic increase in poverty and the poorest countries have not yet recovered. The rate of extreme poverty in the world increased by 0.85 percentage points to 9.7 percent in 2020, and the count of the extreme poor increased by 73 million people that year. While the pandemic occurred on a global scale, poorer countries were hit hardest, especially lower-middle-income countries, and the economic recovery has been uneven across countries (see Figure 2).
Figure 2: Uneven economic recovery from the pandemic
Low-income countries, as well as those in fragile and conflict-affected situations, have shown less resilience, as the compounded effects of the pandemic and rising food and energy prices following Russia’s invasion of Ukraine in February 2022 have led to poverty rates remaining higher in 2024 than in 2019. Countries eligible to receive assistance from the International Development Association (IDA) still record an extreme poverty rate identical to the level in 2019. Global extreme poverty returned to pre-pandemic levels by 2023. Recovery was more rapid in upper-middle- and lower-middle-income countries.
2. Increasing debt burdens have limited the fiscal space of the poorest countries and their ability to reignite growth. The COVID-19 pandemic, inflation, and the global economic slowdown have also exacerbated the already high debt levels in poorer countries. Interest payments on total external debt stock in countries eligible to receive assistance from the International Development Association (IDA) have quadrupled since 2012, reaching an all-time high of $23.6 billion. This increase in costs is diverting spending away from critical needs such as health, education, and infrastructure. Countries eligible to receive assistance from the International Development Association (IDA) consist of nearly a quarter (24%) of the world’s population and almost three-quarters (72%) of the world’s extreme poor.
3. Conflicts are increasing uncertainty, disrupting economic activity and hindering economic growth. Over the last decade, fragility and conflict have been on the rise in many parts of the world. As a result, there has been slow progress in poverty reduction in Sub-Saharan Africa, increasing poverty levels in the Middle East and North Africa, and low prospects for poverty reduction in these populations in fragile and conflict-affected situations, going forward (see Figure 1). The concentration of poverty in Sub-Saharan Africa and conflict-affected situations is forecast to intensify. By 2030, one-half of the global extreme poor will be living in today’s fragile and conflict-affected countries within Sub- Saharan Africa, and another one-quarter is projected to be in countries in Sub-Saharan Africa that are not in fragile and conflict-affected situations today.
4. Extreme weather events are also increasing risks to falling into poverty. This last decade has seen the warmest years on record since 1850. At the same time, more and worse extreme weather events in the form of storms, floods, droughts, and heatwaves are occurring due to climate change. These events are significantly hindering poverty reduction efforts in the poorest regions. Sub-Saharan Africa has the largest share of people who are at high risk from extreme weather events. Vulnerability to these extreme weather events is particularly high in Sub-Saharan Africa due to limited supply of basic infrastructure, such as water and electricity, limited financial services, as well as low incomes serving as a weak buffer in times of crisis.
The implications are clear: In the poorest economies, the focus should be on economic growth and investing in human, financial, and physical capital. For lower-middle-income countries, the focus should shift to growth and shared prosperity—and measures to increase the efficiency of policies that increase incomes, improve resilience to shocks, and lower emissions. The first blog of this series expands on these pathways out of the polycrisis.
The authors gratefully acknowledge financial support from the UK Government through the Data and Evidence for Tackling Extreme Poverty (DEEP) Research Program.
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