World Bank Changes Extreme Poverty Definition

World BankThe World Bank updated the international poverty line to US$1.90 a day, from US$1.25 a day. The poverty line was revised to incorporate new information on differences in the cost of living across countries. The World Bank also announced that, using the new line (as well as new country-level data on living standards), global poverty has fallen from 902 million people (12.8% of the global population) in 2012, to 702 million people (9.6% of the global population) in 2015.

“This is the best story in the world today,” said Jim Yong Kim, World Bank President, who said the projections affirm that it is possible to end extreme poverty within this generation. Kim said the continued reduction in poverty is due to strong growth rates in developing countries in recent years, investments in people’s education, health, and social safety nets that have helped to keep people from falling back into poverty. He cautioned that the goal to end extreme poverty remains “a highly ambitious target” because of: slowing global economic growth; many of the world’s poor living in fragile and conflict-affected states; and the considerable depth and breadth of remaining poverty. Rapid population growth remains a key factor blunting progress in many countries.

Poverty is declining in all regions, but becoming deeper and more entrenched in countries that are either conflict-ridden or overly dependent on commodity exports, World Bank estimates show. Sub-Saharan Africa accounts for half of the global poor, while 12% live in East Asia.

In its regional forecasts for 2015, the World Bank said poverty in East Asia and the Pacific will fall to 4.1%, from 7.2% in 2012; while in Latin America and the Caribbean it will fall to 5.6% from 6.2% in 2012; in South Asia to 13.5% in 2015, compared to 18.8% in 2012; and in Sub-Saharan Africa decline to 35.2% in 2015, compared to 42.6% in 2012. Reliable current poverty data is not available for the Middle East and North Africa because of conflict and fragility in key countries in the region, according to the Bank.

Kim said further reductions in poverty will 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 and sanitation; and protecting the poor and vulnerable against sudden risks of unemployment, hunger, illness, drought and other calamities.

The updated global poverty line and rate are based on newly available price data from across the world. The updating affects not only where the global poverty line is drawn, but the cost of basic food, clothing, and shelter needs of the poorest around the world.

Ana Revenga, World Bank, said that as important as the global poverty line are the national poverty lines set by each country, reflecting their own standards of living. These are crucial for governments and policy makers when planning the programs that will improve lives, she added. Revenga noted that the World Bank Group will continue to work with its country clients and partners to improve how it measures and tracks poverty, to build country statistical capacity and fill persistent data gaps, and to integrate solid data and analysis into its development work to better reach people who live in poverty. [World Bank Press Release] [UN Press Release] [World Economic Forum Article] [Overseas Development Institute Article]

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