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World Bank Sees Progress Against Extreme Poverty, But Flags Vulnerabilities

World Bank
29 February 2012 | Business & Finance

WASHINGTON, February 29, 2012In every region of the developing world, the percentage of people living on less than $1.25 a day and the number of poor declined between 2005-2008, according to estimates released today by the World Bank. This across-the-board reduction over a three-year monitoring cycle marksa first since the Bank began monitoring extreme poverty.

An estimated 1.29 billion people in 2008 lived below $1.25 a day, equivalent to 22 percent of the population of the developing world. By contrast, in 1981, 1.94 billion people were living in extreme poverty. The update draws on over 850 household surveys in nearly 130 countries. 2008 is the latest date for which a global figure can be calculated. This is because, while more recent statistics for middle income countries are available, for low-income countries newer data are either scarce or not comparable with previous estimates.

More recent post-2008 analysis reveals that, while the food, fuel and financial crises over the past four years had at times sharp negative impacts on vulnerable populations and slowed the rate of poverty reduction in some countries, global poverty overall kept falling. In fact, preliminary survey-based estimates for 2010based on a smaller sample size than in the global updateindicate that the $1.25 a day poverty rate had fallen to under half of its 1990 value by 2010. This would mean that the first Millennium Development Goal of halving extreme poverty from its 1990 level has been achieved before the 2015 deadline.

The developing world as a whole has made considerable progress in fighting extreme poverty, but the 663 million people who moved above the poverty lines typical of the poorest countries are still poor by the standards of middle- and high-income countries. This bunching up just above the extreme poverty line is indicative of the vulnerability facing a great many poor people in the world. And at the current rate of progress, around 1 billion people would still live in extreme poverty in 2015.says Martin Ravallion, director of the Banks Research Group and leader of the team that produced the numbers.

The $1.25 poverty line is the average for the worlds poorest 10 to 20 countries. A higher line of $2 a day (the median poverty line for developing countries) revealsless progress versus $1.25 a day. Indeed, there was only a modest drop in the number of people living below $2 per day between 1981 and 2008, from 2.59 billion to 2.47 billion, though falling more sharply since 1999.

"Having 22 percent of people in developing countries still living on less than $1.25 a day and 42 percent with less than $2 a day is intolerable. We need to increase our efforts. On the policy and program side, we need to continue attacking poverty on many fronts, from creating more and better jobs, to delivering better educational and health services and basic infrastructure, to protecting the vulnerable. And on the measurement side, countries need to expand data collection and strengthen statistical capacity, particularly in low-income countries, says Jaime Saavedra,director of the World Banks Poverty Reduction and Equity Group.

The public can access all statistics underlying the new international estimates via the online tool, PovcalNet The site also provides estimates more recent than 2008.

PovcalNet is the Banks interactive Open Data tool for poverty and inequality measurement. With PovcalNet, users get access to the data and can replicate the Banks estimates or calculate poverty rates using any poverty line or country groupings they like,says Shaohua Chen, Senior Statistician in the Banks Research Group.

The World Banks methodology is based on consumption and income, adjusted for inflation within countries and for purchasing power differences across countries.

East Asia and the Pacific:About 14 percent of its population lived below US$1.25 a day in 2008, down from 77 percent in 1981, when it was the region with the highest poverty rate in the world. In China, 13 percent, or 173 million people, lived below $1.25 a day in 2008. East Asia achieved MDG1 about 10 years ago.

In the developing world outside China, the extreme-poverty rate was 25 percent in 2008, down from 41 percent in 1981. The number of people living in extreme poverty, however, was about the same in 2008 as 1981 at around 1.1 billion, after rising in the 1980s and 1990s and falling since 1999.

South Asia: The $1.25 a day poverty rate fell from 61 percent to 36 percent between 1981 and 2005 and fell a further 3.5 percentage points between 2005 and 2008. The proportion of the population living in extreme poverty is now the lowest since 1981.

Latin America and the Caribbean: From a peak of 14 percent living below $1.25 a day in 1984, the poverty rate reached its lowest value so far of 6.5 percent in 2008. The number of the poor rose until 2002 and has been falling sharply since.

Middle East and North Africa: The region had 8.6 million peopleor 2.7 percent of the populationliving on less than $1.25 a day in 2008, down from 10.5 million in 2005 and 16.5 million in 1981.

Eastern Europe and Central Asia: The proportion living on less than $1.25 is now under 0.5 percent, having peaked at 3.8 percent in 1999. 2.2 percent lived on less than $2 a day in 2008, down from a peak of 12 percent in 1999.

Sub-Saharan Africa: For the first time since 1981, less than half of its population (47 percent) lived below $1.25 a day. The rate was 51 percent in 1981. The $1.25-a-day poverty rate in SSA has fallen 10 percentage points since 1999. 9 million fewer people living below $1.25 a day in 2008 than 2005.

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