Covid-19: How will it affect Global Poverty?

The World Bank defines extreme poverty as living on less than $1.90 per person per day. The Covid-19 pandemic is a crisis like no other, in terms of its economic and social impacts. The effects of the pandemic have not only been felt in countries struggling with high poverty rates but has also significantly impacted middle-income countries.

Among the most vulnerable, are workers hired on a temporary basis; economic shutdown in urban areas would mean that these workers can no longer remit their earnings to their families residing in rural areas. Additionally, closure of schools would result in a sharp decline in the food intake of children who depend on school feeding programs. In the long term, heavy dependence on such strained public services would mean that these children are restricted in their access to health and nutrition check-ups. As a consequence of limiting the human capital development of these families, they are stuck in an endless cycle of poverty.

In India, the Centre for Monitoring the Indian Economy (CMIE) estimates about 140 million people have lost their jobs. Stranded with no work, migrant workers in Mumbai, India’s largest city, have protested against the extension of the virus lockdown. Government relief arrangements, such as one-off cash transfers of ₹1,000 to senior citizens and disabled people along with monthly donations of 5kg of wheat or rice to those eligible to receive subsidised food, proved to be ineffective in addressing the difficulties of stranded migrant workers.

In April, a rise in food prices and its subsequent unaffordability led to food riots in South Africa. Prior to the pandemic, South Africa was in its second recession in two years. The pandemic exacerbated the effects of the recession on unemployment; one in three people earning an income in February were not by April and of those around half were permanently laid off rather than furloughed. As a result, they will likely remain without a source of income, for an extended period of time.

Latin America has emerged as the global epicentre of the pandemic, with Brazil and Mexico having seen the highest number of deaths in the region. The World Bank speculates that 53 million Latin Americans will see their incomes fall below the regional poverty line of $5.50 per day. Protests that transpired prior to the pandemic, owing to poor public services and stagnant living standards, are now at crossroads with the challenges brought on by the pandemic. The IMF predicts that the already slow-growing economies of Latin America and the Caribbean will contract by 9.4% this year.

The World Bank estimates that up to 71 million people could succumb to extreme poverty resulting from the pandemic. Such an increase in global extreme poverty would be the first since 1998, wiping out progress made since 2017. Although rates of extreme poverty may ease once the pandemic subsides, the projected impacts are likely to last well into the future.

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