Global poverty is expected to rise for the first time in more than 20 years this year as the pandemic compounds the impacts of conflicts and climate change, the World Bank warned on Thursday.
The financial institution projects that COVID-19 could push an additional 88 million to 115 million into extreme poverty this year. This is then projected to rise to 150 million by 2021, depending on the severity of the economic impact.
Extreme poverty is defined as living on less than $1.90 (€1.60) a day.
Because of the pandemic, as many as 9.4 per cent of the world's population could live in extreme poverty this year — an increase from the 9.2 per cent in 2017.
This would be the first regression since 1998 when many Asian countries were dealing with a deep financial crisis.
Had the pandemic not taken place, the poverty rate was expected to drop to 7.9% in 2020.
"In order to reverse this serious setback to development progress and poverty reduction, countries will need to prepare for a different economy post-COVID, by allowing capital, labour, skills, and innovation to move into new businesses and sectors," World Bank Group President David Malpass said.
According to the World Bank report, while many of the new poor will be in countries with already high poverty rates, a number middle income countries will also see big increases in extreme poverty. It estimates that 82 per cent of the total number of people living in extreme poverty will be in middle-income countries.
It also stressed that although COVID-19 is having a huge impact, progress on reducing global poverty had slowed over the past few years with annual drops of 0.5 per cent between 2015 and 2017 compared to yearly reductions of around 1 per cent between 1990 and 2015.
Furthermore, it emphasised that while less than 10 per cent of the world lives on less than $1.90 a day, close to a quarter lives with less $3.20 (€2.70) and more than 40 per cent live with less than $5.50 (€4.70).
This two threshold represent poverty lines in lower-middle-income and upper-middle-income countries.