No poverty
The near future of global poverty
SDG 1 aims to end poverty, in all its forms, everywhere. Globally, poverty has been in decline, but even before this year, the pace of that decline had slowed. The economic effects of COVID-19 may have pushed more than 100 million more people into extreme poverty—the first significant increase in this measure in decades.
At its broadest, poverty reflects an individual’s inability to achieve a particular level of welfare, in terms that may include food, clothing, transportation, public services, health, wealth, or even recreation. The discussion here focuses on poverty in a narrower sense: income or consumption in monetary terms.
Extreme poverty has declined over the past decades
The most pernicious form of poverty recognized under the SDGs is extreme poverty, which is defined as living on less than $1.90 a day and is applied regardless of where a person lives.
Eradicating extreme poverty by 2030 is the focus of SDG target 1.1. In 2015, when the SDGs were adopted, that target appeared ambitious but within reach. In fact, the remarkable reduction of extreme poverty in the last few decades is one of the success stories of global development.
Even as the world’s population has grown, many fewer people are living in extreme poverty
Source: World Bank PovcalNet. World Development Indicators (SI.POV.DDAY; SP.POP.TOTL).
The global population grew from 5.3 to 7.5 billion from 1993 to 2017.
Yet over the same period, the number of people living in extreme poverty fell from 1.9 billion to 689 million.
If that trend had continued beyond 2017, SDG target 1.1 would be met in 2024, six years early.
Unfortunately, projections suggest this outcome will not be achieved. Even under reasonably optimistic scenarios developed before the COVID-19 pandemic, 6.1 percent of the world’s people would likely have still been living in extreme poverty by 2030.
To see why, we need to look beneath the global trend and adopt a country-by-country perspective.
The distribution of poverty across countries and regions is uneven
Poverty headcount ratio at $1.90 a day (2011 PPP), by country (% of population)
Source: World Bank PovcalNet.
At the beginning of the 1990s, the global prevalence of extreme poverty was more than 30 percent, but this average masked great variation across countries. Some, such as those in Europe and North America, had almost no extreme poverty, while a handful of countries in Sub-Saharan Africa, East Asia, and South Asia had extreme poverty rates over 70 percent.
While countries were scattered all along this continuum, two very populous and very poor countries—China and India—accounted for 60 percent of extremely poor people.
Global poverty reduction since 1993 has been driven mainly by the economic performance of these two countries. Of the 1.2 billion people that escaped extreme poverty from 1993 to 2017, 969 million (80 percent) were in China and India.
China reduced its extreme poverty rate from 57 percent in 1993 to under 1 percent in the most recent household survey year. India’s achievement was not as dramatic, but still substantial: it halved its extreme poverty rate between 1993 and 2011 and its 2017 rate is estimated to be just above the world average of 9.2 percent. India will continue to be an important contributor to reducing global extreme poverty.
The extreme poverty rate declined in Sub-Saharan Africa too, from about 60 percent in 1993 to about 40 percent in 2017. But because of rapid population growth, the number of people living in extreme poverty rose from 335 million to 431 million.
Since 2011, South Asia has not been the global center of extreme poverty. Today, the largest number of extremely poor people are concentrated in Sub-Saharan Africa.
The concentration of extreme poverty has shifted from Asia to Africa
High population growth coupled with stubbornly high extreme poverty rates in Sub-Saharan Africa is now the dominant force determining global poverty.
Let’s return to the first chart we saw.
Source: World Bank PovcalNet. World Development Indicators (SI.POV.DDAY; SP.POP.TOTL).
The reduction in extreme poverty since 1993—from 1.9 billion to 689 million people in 27 years—remains a powerful achievement.
But China and India have been responsible for most of that reduction. The rest of the world has made more meager progress.
And in Sub-Saharan Africa the number of extremely poor has actually increased. Eight of the ten countries with the highest number of people living in extreme poverty are in Sub-Saharan Africa: Nigeria, Democratic Republic of Congo, Ethiopia, Tanzania, Madagascar, Mozambique, Kenya, and Uganda.
The future of extreme poverty
Projections of extreme poverty rates to 2030 take into account a country’s historical trends. People can be lifted out of extreme poverty either by per capita growth in a country’s economy or by changes in the welfare distribution. In practice, these two drivers are not mutually exclusive, and it is helpful to imagine a range of scenarios.
Eliminating poverty by 2030 looks unlikely
Source: World Bank PovcalNet. Lakner, C, D. Mahler, M. E. Prydz. 2020. “How Much Does Reducing Inequality Matter for Global Poverty?” Global Poverty Monitoring Technical Note 13, World Bank.
The global rate of extreme poverty combines estimates from household surveys in each country. These take time to field and analyze, so the most recent global estimate, 9.2 percent, is for 2017.
SDG target 1.1 aims to eradicate extreme poverty entirely by 2030. In 2013, the World Bank set a similar numerical target: to reduce the extreme poverty rate to 3 percent.
Using reported macroeconomic data, estimates can be extended from 2017 to 2019. They suggest that the global poverty rate fell below 9 percent.
In January 2020, prior to the COVID-19 pandemic, global poverty was expected to continue to decline to around 8 percent.
With the economic contractions already experienced this year, that is no longer plausible. Instead, under a conservative scenario, at least 88 million people have probably entered extreme poverty in 2020, increasing the global rate to 9.1 percent.
Such an increase would undo three years of progress.
Remember, though, that these estimates have changed and will continue to change as countries face new consequences of, and adopt different responses to, the crisis.
Here, scenarios are a useful way to think about the future
Under more pessimistic assumptions, more than 100 million people may have entered extreme poverty, resulting in an even higher global rate.
Assuming disruptions from COVID-19 begin to abate in 2022, economic growth should help extreme poverty resume a downward trajectory—albeit from a higher level than would otherwise have been the case.
The distribution of growth—whether it accrues more to the poor or to the wealthy—matters too. This adds another layer of uncertainty. But in every plausible scenario the World Bank’s 3 percent target—let alone the SDG target of zero extreme poverty—is probably out of reach before 2030.
Reliably predicting the future of poverty in any particular country is impossible, but without dramatic accelerations in poverty reduction, extreme poverty will linger in many countries well beyond 2030.
On current trends extreme poverty will linger for decades in some countries
Year extreme poverty will be eliminated, by country, linear projection of 20 year trend
Source: World Bank
If poverty reduction trends remain unchanged—based on a linear trend over 20 years—some countries will take decades to eliminate extreme poverty. This illustrative and unsettling exercise provides insight into the urgent need for some countries to accelerate poverty reduction.
For countries in Sub-Saharan Africa where poverty is declining, the median year in which extreme poverty might be eliminated is 2040—well beyond the horizon of the SDGs.
Most concerning, the extreme poverty rate is rising in some countries. Sub-Saharan Africa has the largest share of these countries as well—five out of seven, including some of the poorest economies in the world: Madagascar, Angola, and Liberia.
Beyond $1.90 poverty: national poverty lines
In addition to extreme poverty, which is measured according to a single international poverty line, SDG 1 recognizes that countries may define their own poverty lines according to local conditions. SDG target 1.2 seeks, in each country, to halve the share of the population living in poverty according to that country’s national poverty line.
National poverty lines are often higher than the international poverty line of $1.90 a day, especially for rich countries.
In most countries, poverty measured in this way is decreasing. But not fast enough: it is decreasing rapidly enough to reach the 50 percent reduction target in only a few countries. In many, it is increasing.
Only a handful of countries are on track to halve their national poverty rate by 2030
Poverty headcount ratio and national poverty lines (% of population)
Source: World Bank. World Development Indicators (SI.POV.NAHC).
Poverty, whether defined using the international poverty line or the broader array of measures individual countries adopt, remains a serious global problem. Past decades have seen notable individual country successes and rapid poverty reduction globally, but Sub-Saharan Africa is not yet following that path. Growing population together with the slow pace of poverty reduction makes the region the new center of extreme poverty.
If the world is to meet the targets of SDG 1 in the foreseeable future—let alone by 2030—the status quo is insufficient.
Learn more about SDG 1: No poverty
Notes
- At 2011 purchasing power parity (PPP) prices, which are designed to equate prices around the world for a similar basket of goods. ↩
- The latest comprehensive household consumption expenditure survey for India dates back to 2011/12. The unavailability of more recent data considerably raises the uncertainty over our understanding of poverty in the country. The methods that have been used to estimate poverty in India for 2017 are discussed in box 1.2 of World Bank. 2020. Poverty and Shared Prosperity 2020: Reversals of Fortune. Washington, DC: World Bank. ↩
- Lakner, C, D. Mahler, M. Negre, and E. Prydz. 2020. “How Much Does Reducing Inequality Matter for Global Poverty?” Global Poverty Monitoring Technical Note 13, World Bank. ↩
- Yonzan, N, C. Lakner, D. Mahler, R. Aguilar, H. Wu. 2020 The impact of COVID-19 on global poverty under worsening growth and inequality. World Bank. ↩