The number of people living in extreme poverty around the world is likely to fall to below the 10 percent of the global population in 2015, according to a forecast released by the World Bank Sunday. The forecast used a new international poverty line of 1.9 U.S. dollars a day, an upgrade from the previous line of 1.25 U.S. dollars a day, which was set in 2005.
The upgraded poverty line incorporated new information on differences in the cost of living across countries and preserved the real purchasing power of the previous line. The reason for the World Bank to adjust the poverty line is to correct for the fact that prices had risen since 2005 and 1.25 U.S. dollars now would no longer buy what it bought in 2005, said the World Bank chief economist Kaushik Basu in a recent blog post.
The method used to upgrade the poverty line was to take the average inflation in the poorest nations of the world and raise the nominal poverty line in order to hold it constant in real terms, according to Basu. Using the new line, the World Bank projected that global poverty will fall from 902 million people or 12.8 percent of the global population in 2012 to 702 million people, or 9.6 percent of the global population this year. The continued major reductions in poverty were due to strong growth rates in developing countries in recent years, and investments in people's education, health and social safety nets, said Jim Yong Kim, president of World Bank Group.
According to the World Bank, poverty remained concentrated in Sub-Saharan Africa and South Asia, but its composition across the regions has shifted dramatically. In 1990, East Asia accounted for half of the global poor, whereas some 15 percent lived in Sub-Saharan Africa; by 2015 forecast, Sub-Saharan Africa accounts for half of the global poor, with some 12 percent living in East Asia. "Development has been robust over the last two decades but the protracted global slowdown since the financial crisis of 2008 is beginning to cast its shadow on emerging economies," said Basu. The slower economic outlook for emerging economies will create new challenges in the fight to end poverty and attend to the needs of the vulnerable, especially those living at the bottom 40 percent of their societies, said Basu.
In order to further reduce poverty and boost shared prosperity, the World Bank president called on countries to boost broad-based growth that generates sufficient income-earning opportunities, to invest in such areas as education, health and sanitation, and to protect the poor and vulnerable against sudden risks of unemployment, hunger, illness and other calamities.
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