What Is the Impact of the COVID-19 Pandemic on Poverty?

From September 2022, within a mere six-month timeframe, an additional 11 million individuals have plunged into the depths of extreme poverty as of April 2023, surviving on a meager $2.15 or less per day. Consequently, the global tally of impoverished individuals now reaches a staggering 659 million, as reported by the World Bank and their research data via the Poverty and Inequality Platform.[1]

The International Monetary Fund (IMF) forecast that global growth would decline by 4.9 percent in 2020, with a particularly adverse effect on low-income households. In it’s April 2023 update, the global growth forecast declined further down to 2.5 percent–the weakest growth since the global downturn of 2001. This imperils progress made in reducing extreme poverty worldwide since the 1990s.

When it comes to predicting the impact of COVID-19 and the world’s next epicenter the outcome is anyone’s guess. But this much is certain: impact of COVID-19 on poverty, as well as the impact of COVID-19 on migration, has been pronounced, with a significant increase in the numbers of people living in extreme poverty.

“In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020; greater scarring (damage to supply potential) from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020; and a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices,” the agency said in an update to its World Economic Outlook.^[3]

The pandemic has hindered the fight against poverty by making the battle that much tougher. According to the World Bank, half of the world’s poor live in five countries: India (24 percent), Nigeria (12 percent), Democratic Republic of Congo (7 percent), Ethiopia (4 percent), and Bangladesh (3 percent).^[7] Yet no matter where they live, the bank says the poor will be hurt by the deepest global recession in decades, despite extraordinary efforts by governments to offer support. It noted the speed at which the crisis overtook the global economy may offer hints at how deep the recession will extend.

“Over the longer horizon, the deep recessions triggered by the pandemic are expected to leave lasting scars through lower investment, an erosion of human capital through lost work and schooling, and fragmentation of global trade and supply linkages,” the bank said in releasing its June report on global economic prospects. “For emerging market and developing countries, many of which face daunting vulnerabilities, it is critical to strengthen public health systems, address the challenges posed by informality, and implement reforms that will support strong and sustainable growth once the health crisis abates.”^[8]

Conditions in poorer nations illustrate why the coronavirus poses such challenges. The homeless and others living in urban slums who lack access to piped water and improved sanitation struggle to practice social distancing. They are also pressed to maintain higher levels of personal hygiene that residents of affluent nations often take for granted.

For example, in Brazil—which earlier this year had suffered the world’s second-highest number of COVID-19-related deaths—about 15 percent of people have no access to piped water and half have no access to improved sanitation. In Bolivia, the figures are nearly a third with no access to water and about half that number with no sanitation. In Honduras, the figures are nearly 20 percent and nearly 10 percent, respectively; in Peru, each is more than 15 percent.^[9]