Global Poverty -A World Bank Perspective

Poverty---The Great Plague gulping the Globe !!

PovertyNet
Poverty and Health
Poverty Reduction Strategy


An Analysis halfing it by 2015 with 1990 stats



At A Glance

· The world remains on track to meet the first Millennium Development Goal (MDG) target of halving the 1990 poverty rate by 2015, which has been at the center of the global effort to fight extreme poverty and hunger. Based on this year’s World Bank projections, the number of people living on less than $1.25 a day is projected to be 883 million in 2015, lower than the previous estimate of 918 million.

· The poverty rate declined to 25 percent of the global population in 2005, compared with 42 percent in 1990 and 52 percent in 1981. By 2015, that number is expected to drop to less than 15 percent.

· Rising food prices have driven an estimated 44 million people into poverty in developing countries between June and December 2010, as food prices rose to near 2008 levels. We expect more challenges ahead, given the recent series of global economic crises and spikes in food prices.



Poverty: Recent Estimates and Outlook

Between 1981 and 2005, the share of the developing world’s population living below $1.25 a day was halved from 52 to 25 percent. This amounts to a decline of one percentage point per year in the aggregate extreme poverty rate, reducing the number of poor by 500 million (from 1.9 billion to 1.4 billion) during that period. Preliminary estimates suggest that the number of people living below $1.25 a day likely dropped by an additional 200 million between 2005 and 2008, to 1.2 billion people.[1]



Extreme poverty worldwide is projected to drop to 883 million (14.4 percent) by 2015, according to the World Bank’s Global Monitoring Report 2011. This means the developing world remains on track to achieve the MDG target to reduce by half the 1990 extreme poverty rate (42 percent of the global population) by 2015. However, low-income countries, particularly fragile states and those in sub-Saharan Africa, tend to lag behind middle-income countries in their progress toward reaching the MDGs.



The decline in poverty between 1981 and 2005 varied considerably across regions. Led by China, the East Asia and Pacific Region made dramatic progress, with poverty incidence dropping from 78 percent to 17 percent, using the $1.25 a day poverty line at 2005 prices. At the other end of the spectrum is Sub-Saharan Africa, which saw only a modest decline in the poverty rate for $1.25 a day between 1981 and 2005. As a result, due to population growth, the number of poor people living in Sub-Saharan Africa almost doubled and its share of the world’s poor increased from 11 percent to 27 percent during this period.



The poverty rate fell in South Asia, Latin America and the Caribbean, Middle East, and North Africa during the same period, although the number of the poor remained static (Figure 1). A less frugal standard of $2 per person per day is more appropriate for regions such as Latin America and the Caribbean, and Eastern Europe and Central Asia. The share of global population living below $2 a day (at 2005 prices) fell from 70 percent in 1981 to 47 percent in 2005. But because of population growth, the number of people living below that line remained about 2.5 billion.





Figure 1.

Poverty incidence at $1.25 or less a day

(1981-2005)








Figure 2.

Population in extreme poverty (1981-2005)





How the World Bank is Fighting Poverty



At the heart of the Bank’s work is its focus on poverty reduction. In addition to causing hunger and malnutrition, poverty makes people vulnerable to shocks, such as the global economic crisis, climate change and natural disasters. The World Bank seeks to reduce poverty by supporting the design and implementation of country poverty-reduction strategies through a variety of analytical and lending instruments. It aims to expand growth opportunities, reduce vulnerability to shocks, and improve the poor’s access to basic services.



With less than four years to go, achieving the global goals by 2015 will be a challenge, made harder by the global economic crisis and other shocks. For example, while per capita real growth rates in low-income economies show signs of recovery from the global financial crisis, they are still down from the pre-crisis level. The recent rise in the Bank’s food price index in 2010 - to levels near its June 2008 peak — is raising concerns about the affordability of food for the poorer segments of developing countries. According to Bank estimates, 44 million more people are likely to have become poor between June and December 2010 because of the higher food prices. In response to the emerging challenges, the Bank prepared a new strategy that aims to foster multi-polar growth, respond effectively to complex global interactions, and better manage and anticipate potential shocks and new crises.



Country-Led Development Strategies



Many developing countries have prepared national strategies to boost their effort to combat poverty. Framed against a long-term development vision, in many cases these strategies set medium-term targets for progress toward the MDGs and related development outcomes. They also define clear national plans and priorities for achieving those targets, linking policy agendas to medium-term fiscal frameworks. As of June 2010, 67 low and lower-middle income countries prepared Poverty Reduction Strategy Papers (PRSPs) and 35 of them already produced the second generation of PRSPs. Also, many middle income countries set poverty reduction as targets or included different dimensions of poverty in their development objectives. The Bank aligns its activities to these national strategies through its Country Assistance Strategies or Country Partnership Strategies, which serve as a basis for harmonization with other development partners. Recent examples of working with development partners include the Bank’s close collaboration with U.N. agencies on a common strategy to confront the food crisis, and coordination with other global financial institutions (such as the IMF) in assisting countries hit hard by the financial crisis.



For more information on poverty, see: www.worldbank.org/poverty and http://econ.worldbank.org/povcalnet. For the latest World Bank poverty research, see: http://econ.worldbank.org/programs/poverty



Contacts:

Alejandra Viveros and Merrell Tuck

(202) 473-4306 and (202) 473-9516

aviveros@worldbank.org and mtuckprimdahl@worldbank.org



Updated July 2011













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[1] The global poverty estimate for 2008 is preliminary and will be updated further when additional data becomes available. Gaps in the regional coverage of 2007-2009 household surveys, particularly in South Asia and Sub-Saharan Africa, preclude a more accurate estimation of global and regional poverty in 2008. Efforts are under way to close remaining gaps and to update the estimates by the end of 2011.










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