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World Bank says poverty rate has halved

A woman separates grain from dust after a food aid delivery at a camp for displaced people in Sudan. According to the World Bank, extreme poverty in Sub-Saharan Africa is increasing. PHOTO: AFP

Rapid economic growth in South and East Asia has pulled more than 500 million people out of extreme poverty since 1981 and the global poverty rate has been halved, the World Bank said on Friday.

But while South and East Asia have seen the most benefit from these developments, many countries in Africa, Latin America, Eastern Europe and Central Asia have lost ground or improved only slightly, the World Bank said in its statistical report, the World Development Indicators (WDI).

The number of people living in extreme poverty -- defined as less than US$1 a day -- also dropped to 1.1 billion people in developing countries in 2001, from 1.5 billion people in 1981.

The global poverty rate dropped from 40 percent in 1981 to 21 per cent in 2001, according to the data.

The world is on track to reach the first of the eight Millennium Development Goals (MDG) -- to reduce the 1990 poverty rate by half by 2015 -- but progress was uneven and many countries will be far from reaching that goal, the report said.

Francois Bourguignon, the World Bank's chief economist, said there was "good news," but added that the poverty problem will largely shift from Asia to Sub-Saharan Africa, where a projected one in two of the world's poorest will live by 2015. Some 15 percent of the world population, or 900 million people, will live on less than US$1 a day by 2015.

"Economic growth in China and India has delivered a dramatic reduction in the number of poor," Bourguignon said.

"But other regions have not enjoyed sustained growth and, in too many cases, the number of poor has actually increased. Although we are likely to reach the first Millennium Development Goal of reducing poverty by half worldwide by 2015, much more aid, much more openness to trade, and more widespread policy reforms are needed to achieve all the [goals] in all countries."

The statistics suggested that an increase in trade and growth, combined with ongoing efforts to develop human capital and a sound investment climate, are most effective in reducing poverty, the bank said.

"Enhancing security for poor people means reducing their vulnerability to ill health and economic shocks," said Martin Ravallion, manager of the World Bank's poverty research program.

Assuming that current trends continue, most developing countries will fail to meet the millennium goals by 2015, the World Bank and International Monetary Fund (IMF) said in a separate report released during their annual spring meetings in Washington.

The report said it was crucial to implement strategies to ensure access to basic needs such as health, nutrition -- and underscored the needs with the urgency of 840 million people who are chronically undernourished.

The quality of life among the poor often remained unchanged even in regions that experienced rapid growth, according to the report.

If the current trend continues, children in more than half of developing countries will not be attending a full course of primary education by 2015, which was one of the eight millennium goals.

Much of the progress came in the 1980s, the report said. From 1990 to 2001, about 120 million -- from 1.2 billion to 1.1 billion -- climbed out of extreme poverty.

In China, which has seen extraordinarily strong growth in the past decades, the poverty rate fell from 64 percent to 17 percent from 1981 to 2001. But half of the progress came in the first years of the 1980s. About 212 million Chinese live below the extreme poverty line.

While South Asia reduced its extreme poverty rate to 31 percent from 41 percent in 1990, backed by economic expansion, the region's absolute poverty numbers dropped by only 34 million people to 428 million because of population growth, according to the report.

Extreme poverty rose in Sub-Saharan Africa. Per capita GDP declined 15 per cent since 1981, while the number of people living on less than US$1 a day almost doubled, from 164 million people to 314 million. Some 47 percent of the region's people live below the extreme poverty line.

Eastern Europe and Central Asia, which had extremely low poverty rates of almost zero in 1981, saw that rate climb to 6 percent in 1999 because of high unemployment and declining output.

In Latin America, the rate of 10 percent living in extreme poverty remained almost unchanged since 1981, while in the Middle East and North Africa that rate fell from 5 percent to 2 percent since 1981.

A key step to eliminating poverty is creating access to markets for sustained growth, the report said. It also called for reducing rich countries' subsidies in agriculture, worth US$330 billion a year.

It further urged rich countries to increase aid flows, especially to the poorest countries, in addition to debt reduction. Total world military expenditure was US$794 billion in 2002, more than 10 times the amount of aid.

The IMF projected this week that the world economy will grow 4.6 percent this year and 4.4 percent in 2005. The current upswing offers a chance to push through much-needed reforms to reduce poverty, IMF Acting Managing Director Anne Krueger said.
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