A World Bank report released in October 2022 states worriedly that the progress toward achieving the U.N. Sustainable Development Goal of ending extreme global poverty by 2030 is off track. The report, “Poverty and Shared Prosperity 2022: Correcting Course,”states that around 7% of the world will still earn under $2.15 per day, the new extreme poverty standard. However, the World Bank has stated that this prediction may not come to fruition. The report lays out policies that could accelerate the decline in global poverty.
A 30-year Progress
In the past 30 years, the decline in global poverty has been nothing short of astounding. While nearly 1.6 billion of the world’s population lived in extreme poverty in 1990, the number is now only 8%. This 30-year period of unprecedented growth saw countries invest in social welfare programs. These social safety nets protect nearly 2.5 billion people and account for 36% of the reduction in global poverty as the World Bank stated.
The slowdown in the 30-year global poverty reduction progress has caused some concerns. From 1990 to 2015, the yearly poverty reduction rate generally remained above one percentage point, according to ODI. Today, the rate is now consistently under half a percentage point. Additionally, the fight against poverty has not had even distribution, with 700 million people in sub-Saharan Africa living in extreme poverty. Although the current definition is less than $2.15 a day, nearly half of the world lives with less than $5.50 a day which is an appallingly low amount. The COVID-19 pandemic appears to have worsened global poverty, at least in the short term. More than 70 million people lived in extreme poverty in 2020 alone, the largest single-year leap since 1990.
Takeaways From the World Bank Report
According to the World Bank report, the high inflation, shutdowns in COVID-19 economic programs and conflicts such as the war in Ukraine have slowed poverty reduction to a halt. Hence, although extreme poverty slightly decreased from 2020 to 2022, progress may stagnate. Given this new information, the World Bank report concludes that eliminating extreme poverty by 2030 is highly unlikely. For instance, many lower-income countries expect to see extreme poverty rates increase over the next few years. To achieve the goal of ending poverty, regions such as sub-Saharan Africa should develop at eight times the historical pace. As the report summarizes, ending extreme poverty by 2030 is already an ambitious goal and “recent setbacks have put this target nearly out of reach.”
The World Bank report is not all doom and gloom. With the exception of the Middle East and North Africa, the trend in extreme poverty is still one of decline. Most countries are exiting from their pandemic stupor and returning to normalcy. An earlier World Bank report stated that by 2023, the world economy would behave as it had prior to the pandemic. Growth may not be as high as in the rebound year of 2021 when the global economy’s GDP rose by 5.5%, but it will still increase by 3.2%.
In addition, the World Bank report suggests a series of policy changes that could help steer extreme poverty reduction in the right direction. Even amid fears of a global recession and short-term crises, the World Bank has stressed the need to focus on long-term growth, including investments in education and health. They also have highlighted fiscal policy, manipulations of the money supply to change inflation and interest rates, as a tool to protect poor citizens. Borrowing for pandemic relief has been an effective way of preventing economic collapse, but doing this in the long term could lead to a strain on the budget, according to another 2022 World Bank report.
Continuing the Fight
The admission that one of the most important U.N. Sustainable Development Goals will not be achieved demonstrates how impactful the COVID-19 pandemic was, not just in the short term, but for ongoing projects since before the millennium began. At the same time, the World Bank report is a reminder that plans for the elimination of extreme poverty are always in flux, needing constant reworking to be effective and realistic. The 2030 goal may be out of reach, but the fact it was possible is a positive testament to successes in the fight against poverty.
– Samuel Bowles