The coronavirus is cutting income and consumption levels for many families and could have a greater impact than the 2008 financial crisis. Many countries could revert to poverty levels last seen in the early 1990s. Up to a billion people would be in “extreme poverty”, with another four billion living on just US.50 a day.
Hong Kong (AsiaNews) – The COVID-19 pandemic which started in China, is now truly global with almost 1.5 million cases and 89,000 deaths. Its fallout could be up to half a billion people thrown into poverty, this according to Oxfam, a world anti-poverty advocacy group.
A report by the Nairobi-based charity ahead of next week’s International Monetary Fund (IMF)/World Bank annual meeting looked at the impact of the crisis on global poverty due to shrinking household incomes and consumption.
“The economic crisis that is rapidly unfolding is deeper than the 2008 global financial crisis,” the report found. “The estimates show that, regardless of the scenario, global poverty could increase for the first time since 1990”.
In light of the situation, some countries could be thrown back to poverty levels last seen some 30 years ago.
The report authors looked at a number of scenarios, taking into account the World Bank’s various poverty lines – from extreme poverty, defined as living on US.90 a day or less, to higher poverty lines of living on less than US .50 a day.
Under the most serious scenario, a 20 per cent contraction in income, the number of people living in extreme poverty would rise by 434 million people to 922 million worldwide.
The same scenario would see the number of people living below the .50 a day threshold rise by 548 million people to nearly 4 billion.
Women are at more risk than men, as they are more likely to work in the informal economy with little or no employment rights.
In addition, more than 2 billion people are employed in the informal sector with no access to sick pay.
The World Bank last week said poverty in East Asia and the Pacific region alone could increase by 11 million people if conditions worsened.
Large-scale poverty, overcrowding and inadequate healthcare systems complicate the situation further.
In Indonesia, projections have shown that up to 240,000 people could die if no measures are taken to control the coronavirus epidemic. What is more, in this country, the economic crisis caused by the pandemic, experts warn, could be “even more severe than the health crisis”.
In Indonesia, extreme poverty is not high, but many Indonesians live just above the extreme poverty line. If the economic lockdown continues, they could be overwhelmed.
For Lyn Morgain, the chief executive of Oxfam Australia, whilst a number of countries in South-East Asia had technically reached middle income status, their development was uneven so that they had “profound and deep poverty” levels.
To buffer the impact of the pandemic, Oxfam came up with a six-point action plan that would see people and businesses in need get cash grants and bailouts, debt cancelled, additional IMF support, and more aid.
According to Oxfam, the plan would be funded by taxing wealth, extraordinary profits, and speculative financial products.
Overall, governments around the world would have to mobilise at least US.5 trillion to support developing countries.