- World Bank: 60 Million People Could Be Pushed Into Extreme Poverty In 2020
The World Bank has urged Nigeria and other countries to go for comprehensive policies capable of boosting long-term growth along with short term measures to address health emergencies in the wake of the coronavirus crisis.
This is coming amid indications from the World Bank that an additional 60 million people could be pushed into extreme poverty in 2020.
These were contained in the analytical chapters released from the World Bank Group’s Global Economic Prospects report.
According to the analysis released ahead of the June 8 issuance of the full report, which will include the Bank Group’s latest forecasts for the global economy, the World Bank disclosed that securing core public services, getting money directly to people and maintaining the private sector will limit the harm and help prepare the economy for recovery after the COVID 19 pandemic.
“The coronavirus (COVID-19) pandemic and the economic shutdowns are dealing a severe blow to the global economy and especially poorer countries. Developing countries and the international community can take steps now to speed recovery after the worst of the health crisis has passed and blunt long-term adverse effects
Short-term response measures to address the health emergency and secure core public services will need to be accompanied by comprehensive policies to boost long-term growth, including by improving governance and business environments, and expanding and improving the results of investment in education and public health. To make future economies more resilient, many countries will need systems that can build and retain more human and physical capital during the recovery – using policies that reflect and encourage the post-pandemic need for new types of jobs, businesses, and governance systems” the analysis stated.
According to World Bank Group President David Malpass, the scope of devastation that the pandemic has had on global economies is severe.
He said; “The scope and speed with which the COVID-19 pandemic and economic shutdowns have devastated the poor around the world are unprecedented in modern times. Current estimates show that 60 million people could be pushed into extreme poverty in 2020. These estimates are likely to rise further, with the reopening of advanced economies the primary determinant.
”Policy choices made today – including greater debt transparency to invite new investment, faster advances in digital connectivity, and a major expansion of cash safety nets for the poor – will help limit the damage and build a stronger recovery. The financing and building of productive infrastructure are among the hardest-to-solve development challenges in the post-pandemic recovery. We need to see measures to speed litigation and the resolution of bankruptcies and reform the costly subsidies, monopolies, and protected state-owned enterprises that have slowed development,” he said.
Recall that the National Bureau of Statistics (NBS), in a report on May 4, 2020 about poverty and inequality from September 2018 to October 2019, disclosed that 40 percent of people in Nigeria lived below its poverty line of 137,430 naira ($381.75) a year. It said that represents 82.9 million people.
On a global scale, according to the most recent estimates by the World Bank, in 2015, 10 percent of the world’s population or 734 million people lived on less than $1.90 a day. The global extreme poverty rate could rise by 0.3 to 0.7 percentage points, to around 9 percent in 2020, the report projected
The World Bank further disclosed that in the long-term, the pandemic will leave lasting damage through multiple channels, including lower investment; erosion of physical and human capital due to the closure of businesses and loss of schooling and jobs; and a retreat from global trade and supply linkages. These effects will lower potential output – the output an economy can sustain at full employment and capacity –and labor productivity well into the future. Pre-existing vulnerabilities, fading demographic dividends, and structural bottlenecks will amplify the long-term damage of deep recessions associated with the pandemic.
On her part, Ceyla Pazarbasioglu, World Bank Group Vice President for Equitable Growth, Finance, and Institutions, there is the urgent need for measures capable of limiting the damage and rebuilding the economy.
“When the pandemic struck, many emerging and developing economies were already vulnerable due to record-high debt levels and much weaker growth. Combined with structural bottlenecks, this will amplify the long-term damage of deep recessions associated with the pandemic. Urgent measures are needed to limit the damage, rebuild the economy, and make growth more robust, resilient, and sustainable” she said.
Ayhan Kose, Director of the World Bank’s Prospects Group posited that oil-exporting economies stand a huge risk occasioned by the volatility in the global oil market. He, therefore, called for the diversification of their economies.
“Oil-exporting emerging and developing economies entered the current crisis with eroded fiscal positions after having drawn on them to weather the 2014-16 oil price drop. In addition to the unprecedented public health crisis, these economies are now experiencing sharp economic downturns as their export revenues nosedive. Even if oil prices rise as global oil demand recovers, the recent plunge in prices is another reminder for oil-exporting countries of the urgency to continue with reforms to diversify their economies,” he said.
It would be recalled that due to the COVID-19 crisis which trigerred oil price drop, a disproportionate impact is expected on the poor through job loss, loss of remittances, rising prices, and disruptions in services such as education and health care.
As a result, poverty rates is expected to go up as the global economy falls into recession and there is a sharp drop in Gross Domestic Product, GDP per capita.
This prompted the World Bank Group’s Global Economic Prospects report to indicate ways through which this devastating effect on the economy could be cushioned. The full report is expected to be released by the World Bank on June 8, 2020.
