World Bank Says Global Extreme Poverty Dropped in 2005-2008

The World Bank said today that the number of people living on less than $1.25 a day declined between 2005 and 2008.

An estimated 1.29 billion people in 2008 lived in extreme poverty, equal to 22 percent of the population of the developing world, the World Bank said in an e-mailed release. By contrast, 1.94 billion people in 1981 were living below $1.25 a day. The reduction over the period “marks a first since the Bank began monitoring extreme poverty,” it said.

Analysis since 2008 shows that, “while the food, fuel and financial crises over the past four years had at times sharp negative impacts on vulnerable populations and slowed the rate of poverty reduction in some countries, global poverty overall kept falling,” the release said.

“The crisis certainly caused a lot of pain and suffering around the world but the momentum in reducing poverty has been maintained,” Martin Ravallion, director of the Bank’s research group, said in a press conference.

The percentage of those living in extreme poverty dropped in every region of the developing world, the release said. Preliminary estimates for 2010 -- based on a smaller sample size than in the global update -- indicate that the $1.25-a-day poverty rate had fallen to under half of its 1990 proportion by 2010, the Bank said.

‘Less Progress’

“We’ve made less progress in getting people over the $2-a-day line,” Ravallion said during the press conference. The release said there was only a “modest drop” in the number of people living below $2 a day, from 2.59 billion in 1981 to 2.47 billion in 2008, though the level has been falling more sharply since 1999.

The progress made by sub-Saharan Africa in reducing extreme poverty is particularly notable, Ravallion said in the press conference. Less than half its population, 47 percent, lived below $1.25 a day for the first time since 1981, with 9 million fewer people living at that level in 2008 than 2005, the report said.

East Asia and the Pacific region had about 14 percent of its population living in extreme poverty in 2008, down from 77 percent in 1981 when the region had the highest poverty rate in the world, the release said. In China, 13 percent or 173 million people, lived below $1.25 in 2008.

‘Excellent Conditions’

“China had excellent conditions for economic growth and poverty reduction,” Ravallion said. Widespread access to health and education and generally low inequality made it easier for China to reduce poverty with economic growth, he said.

The World Bank has also seen “a lot of progress” in Latin America in reducing poverty, which, in contrast to China, had greater levels of inequality, he said. “Brazil had the dubious distinction” of one of the highest levels of inequality but has had a turnaround in social policies, he said.

“Despite the crisis in 2008 and 2009 the reduction in poverty has been sharp” in Latin America, said Jaime Saavedra, director of the World Bank’s Poverty Reduction and Equity Group, during the press conference.

For Latin American and the Caribbean, the poverty rate fell to a record low of 6.5 percent in 2008 from a peak of 14 percent living below $1.25 a day in 1984, the release said.

Biggest Threat

The biggest threat to continuing to reduce poverty levels would be economic contraction, Ravallion said. The leader of the team that produced the numbers said initially he was “pessimistic” about the ability of developing countries to sustain the reduction of extreme poverty during the financial crisis of 2008-2009 because fiscal stabilization efforts have come too late in the past. “I was proven wrong,” Ravallion said.

“This time, they got it right,” he said. “In the end, the governments did the right thing,” he added, noting India’s efforts in particular. “India was lucky because it was pumping up a huge anti-poverty program just as the crisis came,” he said.

While there has been a lot of progress, with 43 percent of the population living below $2 a day, “we still have homework,” Saavedra said. Growth is still high in the developing world but the fiscal space that countries have to react “is smaller than in 2008 or 2009,” he said.

In terms of making further progress, “there is no one single recipe and the attack on poverty has to be on multiple fronts,” he said. “Making sure growth generates more and better jobs will have a huge dent on poverty.”

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