World Bank sees global poverty rate below 10% in 2015

The number of people living in extreme poverty around the world is likely to fall to below 10 per cent of the global population, down from the earlier estimate of 20 per cent, in 2015, according to a forecast released by the World Bank on Sunday.

The latest projections give fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030, the release stated.

The forecast uses an updated international poverty line of $1.90 a day, which incorporates new information on differences in the cost of living across countries (the PPP exchange rates). The new line preserves the real purchasing power of the previous line (of $1.25 a day in 2005 prices) in the world's poorest countries.

Using this new line (as well as new country-level data on living standards), the World Bank projects that global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, this year.

As per the earlier estimate, about one in five persons in developing regions lived on less than $1.25 per day.

The overwhelming majority of people living on less than $1.25 a day belong to two regions - Southern Asia and sub-Saharan Africa.

Actual poverty data from low income countries come with a considerable lag but the organization, which released the information on the eve of its Annual Meetings in Lima, Peru, based its current projections on the latest available data.

The reduction in poverty rates has been due mainly to strong growth rates in developing countries in recent years, investments in people's education, health, and social safety nets, Jim Yong Kim, World Bank Group president, said.

He cautioned, however, that with slowing global economic growth, and with many of the world's remaining poor people living in fragile and conflict-affected states, and the considerable depth and breadth of remaining poverty, the goal to end extreme poverty remained a highly ambitious target.

''This is the best story in the world today - these projections show us that we are the first generation in human history that can end extreme poverty,'' Kim said.

''This new forecast of poverty falling into the single digits should give us new momentum and help us focus even more clearly on the most effective strategies to end extreme poverty. It will be extraordinarily hard, especially in a period of slower global growth, volatile financial markets, conflicts, high youth unemployment, and the growing impact of climate change. But it remains within our grasp, as long as our high aspirations are matched by country-led plans that help the still millions of people living in extreme poverty.''

In April 2013, the board of governors of the World Bank Group endorsed two goals - to end extreme poverty by 2030, and to boost shared prosperity by raising the incomes of the bottom 40 per cent of populations.
 
Kim said that further reductions in poverty rates would come from evidence-based approaches, including:  broad-based growth that generates sufficient income-earning opportunities; investing in people's development prospects through improving the coverage and quality of  education, health, sanitation, and protecting the poor and vulnerable against sudden risks of unemployment, hunger, illness, drought and other calamities.

These measures, he said, would also greatly boost shared prosperity, improving the welfare of the least well-off in every country. 

''With these strategies in place, the world stands a vastly better chance of ending extreme poverty by 2030 and raising the life prospects of low-income families,'' said Kim.

Three regions - East Asia and Pacific, South Asia, and Sub-Saharan Africa - have accounted for some 95 per cent of global poverty. Yet, the composition of poverty across these three regions has shifted dramatically.

In 1990, East Asia accounted for half of the global poor, whereas some 15 per cent lived in Sub-Saharan Africa; by 2015 forecasts, this is almost exactly reversed: Sub-Saharan Africa accounts for half of the global poor, with some 12 per cent living in East Asia.

Poverty is declining in all regions but it is becoming deeper and more entrenched in countries that are either conflict ridden or overly dependent on commodity exports, the report noted.

The growing concentration of global poverty in Sub-Saharan Africa is of great concern. While some African countries have seen significant successes in reducing poverty, the region as a whole lags the rest of the world in the pace of lessening poverty.

Sub-Saharan poverty fell from an estimated 56 per cent in 1990 to a projected 35 per cent in 2015. Rapid population growth remains a key factor blunting progress in many countries - as this year's Global Monitoring Report to be launched on 8 October shows.

In its regional forecasts for 2015, the bank said that poverty in East Asia and the Pacific would fall to 4.1 per cent of its population, down from 7.2 per cent in 2012.

Poverty in Latin America and the Caribbean would fall to 5.6 per cent from 6.2 in 2012.

In South Asia the percentage of population below poverty line would fall to 13.5 per cent in 2015, compared to 18.8 per cent in 2012 while that of Sub-Saharan Africa would decline to 35.2 per cent in 2015, compared to 42.6 per cent in 2012.