As coronavirus plunged the world into greater depths of inequalities, it also led to the largest increase in poverty since 1990, the World Bank has said in one of its latest reports. Climate shocks and the Ukraine war – the conflict among the world’s biggest food producers – further hindered a swift growth. Russia and Ukraine are among the top wheat producers and the war – which began in February – has significantly hit supplies.
In its key findings, the World Bank’s Poverty and Shared Prosperity 2022 – Correcting Course report says that the pandemic led to a sharp increase in the global extreme poverty rate. This shot up to an estimated 9.3 percent in 2020 from 8.4 percent in 2019. Amid the surge, more than 70 million people were pushed into extreme poverty by the end of 2020, increasing the global total to over 700 million.
The income losses of the world’s poorest, as per the findings, were twice as high as the world’s richest, and global inequality rose for the first time in decades.
2022 is set to be the second worst year for poverty reduction in two decades – after 2022 – with as many as 685 million people likely to still be living in extreme poverty. In 2019, nearly half of the world’s population – about 47 per cent – struggled to make ends meet.
As measures of course correction, the report recommends these structural changes in fiscal policy: 1) Reorient spending away from subsidies toward support targeted to poor and vulnerable groups; 2) Increase public investment that supports long-run development; and 3) Mobilize revenue without hurting the poor.
