global poverty reduction in 2022
As the year 2022 drew to a close recent data from the World Bank reveals that this is “the second-worst year” for global “poverty reduction in the past two decades.” The reasons for the “steep slowdown of the global economy” are many – the lingering effects of COVID-19, Russia’s invasion of Ukraine, debt crises and many other sub-factors that exacerbate the situation. New projections show that 7% will still be living in extreme poverty by 2030 – considerably higher than the 3% goal. Global organizations such as Oxfam America, World Bank and its partners, have acknowledged the situation and launched various initiatives to support the poorest and most vulnerable.

The Global Pandemic

The COVID-19 pandemic had the biggest impact on the poorest people around the world. In comparison to pre-pandemic forecasts, the average income of those in the poorest 40% of the worldwide income distribution is 6.7% lower in 2021, while that of those in the top 40% is down almost 3%. The world’s poorest have not yet begun to make up for their revenue losses, worse yet the average income of the bottom 40% decreased by 2.2% between 2019 and 2021.

Due to the pandemic, an additional 163 million people live on less than $5.50 per day, bringing the world poverty rate from 7.8% to 9.1%. Moreover, an additional 97 million people live on less than $1.90 per day. The World Bank believes that three to four years’ worth of progress toward eradicating extreme poverty has been lost globally.

War in Ukraine

The ongoing war in Ukraine has also largely contributed to the rising cost of living and the slowdown of global poverty reduction in 2022. The repercussions of the war, the sanctions imposed on Russia, such as export bans, rose energy prices and caused huge supply-chain issues pushing 51 million people to fall into poverty according to UNDP.

The war has also led to 20 million people’s daily incomes in lower-middle-income countries falling below the poverty level of $3.20, increasing the percentage of the world’s poor to 9%.

Further data from UNICEF reveals that children carry the “heaviest burden of the economic crisis.” Children make up 25% of the world’s population and 40% of the further 10.4 million suffering from poverty in 2022. Estimates show that one in three children that grow up in poverty will continue to live in poverty for the rest of their adult life. According to UNICEF, children can benefit greatly from the introduction of poverty reduction methods, job initiatives and plans for economic growth.

Global Emergency Markets

Several causes, particularly the incredibly quick economic recovery following the epidemic, caused the energy markets to tighten up in 2021. But, once Russia invaded Ukraine in February 2022, the situation quickly worsened and turned into a full-fledged global energy crisis. Natural gas prices hit record highs, which had an impact on electricity prices in several markets. The price of oil reached its highest point since 2008.

In addition to making families poorer, forcing some factories to reduce output or even close their doors and slowing economic growth to the point that some nations are in the midst of a severe recession, higher energy prices have also led to uncomfortably high inflation.

Spate of Debt Crises

During the past year, developing countries increased debt loans in order to keep up with the rising cost of living and aggravated the debt crisis. The World Bank calculations show that 60% of the world’s poorest countries are “either in debt distress or at risk of it.”

Debt-ridden countries are incapable of making high-return investments in education, research and development, and infrastructure projects, significantly slowing down their economic growth and exacerbating global poverty reduction efforts.

Future Outlook

In the face of all the crises and uncertainties that the past few years have brought to the world arena, organizations like the World Bank’s International Development Association (IDA) are stepping up to “ensure the poorest aren’t left behind.” Its new $93 billion IDA20 package, which will run from 2022 to 2025, aims to help developing countries get to grips with the global crisis the world can’t ignore, the World Bank reports.

IDA wishes to prioritize investment in education and health, reinforce food security, take action on the undeniable threat that is climate change, help countries struggling with conflict and development and improve debt sustainability.

Similarly, The United Nations Secretary-General has set up a Global Crisis Response Group on Food, Energy and Finance in the U.N. Secretariat. Its goal is to help the world’s poorest by “making reserves available to countries at risk of hunger and famine, accelerating the deployment of renewable energy and urging international financial institutions to increase liquidity and fiscal space.”

The year 2022 saw an insecure and uneven economic recovery where global development faced a crisis and poverty reduction efforts took a hard hit. However, many international organizations have united in the common goal to create an ecological, more resilient and sustainable future.

– Ralitsa Pashkuleva
Photo: Flickr