New research from the UNU World Institute for Development Economics Research (UNU-WIDER) estimates that extreme poverty could spike as a result of the COVID-19 pandemic.
Key findings from the working paper, Precarity and the Pandemic: COVID-19 and Poverty Incidence, Intensity and Severity in Developing Countries — a joint effort between UNU-WIDER, King’s College London, and Australian National University — include:
- extreme poverty could rise to over 1 billion people globally as a result of the crisis
- the cost of the crisis in lost income could reach US$500 million per day for the world’s poorest people, and the intensity and severity of poverty are likely to be exacerbated dramatically
- poverty is likely to increase dramatically in middle-income developing countries and there could be a significant change in the distribution of global poverty
- the location of global poverty could shift back towards developing countries in South Asia and East Asia
To address global poverty impacts, the authors — Andy Sumner and Eduardo Ortiz-Juarez of King’s College London and Chris Hoy from Australian National University — propose a three-point policy plan:
- create a rapid-response global commission on poverty and COVID-19 chaired by a G7 leader, a G20 leader, and a G77 leader to discuss the poverty impacts and what financing is needed
- release funds quickly by expanding the existing IMF debt servicing standstill to all developing countries and freezing World Bank debt repayments at least until the end of 2020
- swiftly allocate the newly available funds into countries’ own cash transfer and other social safety programmes
Contextualising the policy plan, Professor Andy Sumner added, “The actual poverty impacts will be determined by what governments do to mitigate the damaging consequences of the pandemic. We have a three-point plan, but global leadership is urgently needed on this. The world’s poorest can’t wait until the G7 meeting in September or the G20 meeting in November”.
More information regarding the study can be found on the UNU-WIDER website.