The impact of COVID-19 (Coronavirus) on global poverty: Why Sub-Saharan Africa might be the region hardest hit
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Note: A more recently updated version of the numbers and chart below is available here.
COVID-19 is taking its toll on the world, causing deaths, illnesses and economic despair. But how is the deadly virus impacting global poverty? Here we’ll argue that it is pushing about 40-60 million people into extreme poverty, with our best estimate being 49 million.
Nowcasting global poverty is not an easy task. It requires assumptions about how to forecast growth and how such growth will impact the poor, along with other complications such as how to calculate poverty for countries with outdated data or without data altogether. All of this goes to say that estimating how much global poverty will increase because of COVID-19 is challenging and comes with a lot of uncertainty. Others have tried to answer the question using general equilibrium models or by exploring what will happen if all countries’ growth rates decline a fixed amount. Here we’ll try to answer the question using household survey data and growth projections for 166 countries.
In particular, we take data from the latest year for which PovcalNet (an online tool provided by the World Bank for estimating global poverty) has poverty estimates for a country and extrapolate forward using the growth projections from the recently launched World Economic Outlook, in which global output is projected to contract by 3% in 2020. This approach assumes that countries’ growth accrues equally to everyone, or in other words that COVID-19 does not change inequality within countries (more on that below). Comparing these COVID-19-impacted forecasts with the forecasts from the previous edition of the World Economic Outlook from October allows for an assessment of the impact of the pandemic on global poverty. Of course other factors may have also worsened (or improved) countries’ growth outlooks between October and April but it’s safe to say that most of the changes in the forecasts are due to COVID-19.
Such forecasts reveal that, when the Asian Financial Crisis hit. With the new forecasts, global poverty—the share of the world’s population living on less than $1.90 per day—is projected to increase from 8.2% in 2019 to 8.6% in 2020, or from 632 million people to 665 million people. Compare this with the projected decline from 8.1% to 7.8% over the same time period using the previous World Economic Outlook forecasts. The slight change from 8.2% to 8.1% for 2019 happens because the revised growth forecasts also changed for non-COVID reasons for some countries. Taking this into account, it means that COVID-19 is driving a change in our 2020 estimate of the global poverty rate of 0.7 percentage points — (8.6%-8.2%)-(7.8%-8.1%). Another way to put this is that the .
The places where the virus is taking its highest toll depends primarily on two factors: 1) the impact of the virus on economic activity and 2) the number of people living close to the international poverty line. IMF projects that advanced economies will contract by around 6% in 2020 while emerging markets and developing economies will contract by 1%. Yet with more people living close to the international poverty line the developing world, low- and middle-income countries will suffer the greatest consequences in terms of extreme poverty.23 million of the people pushed into poverty are projected to be in Sub-Saharan Africa and 16 million in South Asia.
At the country-level, the three countries with the largest change in the number of poor are estimated to be India (12 million), Nigeria (5 million) and the Democratic Republic of Congo (2 million). A big caveat to the India number is that the latest poverty estimates we have from there are from 2011-12. This makes it very difficult to get an accurate picture of poverty in India before the pandemic took off, let alone a picture of poverty today. Countries such as Indonesia, South Africa, and China are also forecasted to have more than one million people pushed into extreme poverty as a consequence of COVID-19. When looking at the impact of the pandemic on higher poverty lines, for example the number of people living on less than $3.20 or $5.50 per day, more than 100 million people will be pushed into poverty. Latin America & Caribbean, East Asia & Pacific and the Middle East & North Africa are all expected to have at least 10 million more people living on less than $5.50 per day.
One way to gauge the uncertainty around these headline numbers is to explore what will happen under slightly more optimistic or pessimistic scenarios. For example, what would happen if growth in all countries were 1 percentage points lower or higher than the World Economic Outlook projections? And what would happen if COVID-19 changes inequality in countries? We know that low-income workers are more likely to lose their jobs as a result of COVID-19, but what does this imply for the poor in Sub-Saharan Africa, many of whom are subsistence farmers? And what about the many emergency packages countries have implemented to assist the most vulnerable households? And what about the decline in wealth from the fall in the stock market which is likely to hit the well-off most? COVID-19 will likely impact countries’ inequalities differently.
What would happen if alongside the deteriorated growth forecasts inequality as measured by the Gini coefficient increased or decreased by 1% in all countries in 2020? 1% changes in the Gini from year to year are very common, what is less common is that these changes go in the same direction in all countries. To measure the impact of increased inequality, we need to make another assumption: how is inequality increasing? Is COVID-19 only hurting the very bottom of the distribution or is the middle class also affected? Here we assume something closer to the latter (which in technical terms will amount to implementing the change in the Gini using a linear growth incidence curve, following this approach).
When changing the growth and inequality assumptions, the projections suggest global poverty estimates in the range of 8.4% and 8.8%, or in other words that the number of people pushed into extreme poverty will be roughly between 40 and 60 million. In the more pessimistic scenarios, global poverty in 2020 would be close to the level in 2017—meaning that world’s progress in eliminating extreme poverty would be set back by three years.
COVID-19 is managed well in the Indian state of Kerala by enforcing social distancing, quarantine of new arrivals from outside and creating awareness.The people are briefed daily on the progress made.
I am quite interest to know the impact of covid-19 on food security SDG2 and poverty SDG1
There is some controversy in DRCongo with the population looking to an African solution.
The emergence of Corona virus around the world threatned economies of the whole world . Looking at Zimbabwe itself , the country is categorized as a developing country without a balanced economy. Food security in Zimbabwe is threatned. The few industries which are functional cannot produce for the whole population of Zimbabwe. Workers cannot go to work to fully produce for the nation which in turn leaves the whole country in absolute poverty.This threatned the subject of Development as the country cannot meet up with the defination of development.
This is so true, but SSA will come out of it within 15 months
we know from current epidemiological data shows that covid-19 disease comorbidity issue has a disproportionate impact on the poor and the healthcare system. I am curious as to the correlation between covid-19 death rate (per population) and gini coefficient at country level.
Please what are some of the effects of the covid-19 on the population growth
Thanks for the article. However it is not really clear how exactly COVID 19 will lead to an increase in extreme poverty, especially in SSA. Plus if we are talking about absolute/ extreme poverty, then the IPL shouldn't be the only measure used.
Yes,but how and why covid 19 will result into extreme poverty in Africa and latin America?
This is very interesting. I am also interested in the projections looking at the measures taken by different African countries at different points of the pandemic. For example Tanzania never had a lock down while most countries had, it would be interesting to see if the effect of COVID-19 was different compared to it's neighbours like Kenya and Uganda who has some form of lockdown.
Wash your hands full with the soap and water
The published data and information regarding the impact of COVID- 19 on poverty are very important for us under uncertain global conditions and limited data base. Further, if there is any possibilities How can we see the global poverty on human development perspectives especially on multidimensional perspectives?
This research is a true reflection of the impacts of Covid-19 on sub saharan Africa. In Kenya most public primary schools have been affected. Most schools are build with funds from poor parents who raises money from small scale farming and deny their family upkeeps and donate for construction of classrooms in those rural primary schools. Now that Covid-19 has affected them economically through closed market where they sale their farm produces due to social distancing, then education system is affected. Despite government of Kenya introducing online learning for students during the current Covid-19, still this is not achievable as most rural families don't own a radio or television. As the government plans to reopen schools in January 2021, a big challenge is on adequatelearning spaces for students since in Kenya a normal classroom has been accommodating between 30-40 students. Where will parents get resources to construct bigger classes to accommodate the students is a nightmare. This then will affect the learner's education especially in rural poor areas where community members are unable to raise one US dollar daily.
First of all, thanks for a great article! Scary how an outbreak of a virus can cause such difference; and personally unfortunately I believe this prospected figures are a bit 'optimistic'. As there are highly possible negative 'domino' effects on any society when such/this virus strike! We can see such 'side-effect' even in developed countries as U.S, and similar social unrest movements will highly possible also increase in the less developed nations! There are several side-effects that will 'drip-down' to the family/individual level - family members who support their younger/older members dies of this virus, and therefore cause a negative effect on that whole household/family/individuals. Further, social unrest and struggle for the (food/job) resources starts a power struggle also on the national level and individuals/groups with 'simple' radical solutions comes into power (elections/violently or part of both). Also, to consider what 'Poverty' is. Is it based upon solely an amount of a certain degree of money or also included a certain amount of 'nutrition' any human need to have to not only survive but live a healthy life! Thus, exposing figures on how 'poverty' is decreasing might fill a good purpose, but believe we also need to be clear on what it really means! From my understanding 100% humanity do Not live a Healthy life with 1 small bowl of rice/potato and 1 litre of semi-polluted water(!) a day! Still not mention the simple fact of maximum working hours! Even developed countries, as Japan, Korea and USA force huge part of their labor-force to work 12-16 hours a day, whereas they often simply economically survive - pay their monthly-life costs!
In short, your figures are based upon a less complex one-dimensional view point, on how this virus will affect poverty. If we consider a more interlinked 3-dimensional view (.) we might highly possible see a much higher decline of an ability to support oneself from an individual, family and national level.
i need more data on impact of COVID 19 on tax collection
Inadequate information of impact of global poverty.
But sufficient.please more information uplod on this page.