The scope and magnitude of the poverty challenge before and after COVID-19: a global survey

We are living through the most traumatic socio-economic crisis in modern times, both in terms of amplitude and depth, since the 1929 Great Depression. The latest forecasts for economic growth from the International Monetary Fund (IMF) indicate an expected further downgrading worldwide growth by -4.9 percent. For the first time since the Great Depression, every region in the world is in recession.

The economic recovery will be a long process. This economic downturn will push people further into poverty, fuel inequalities across regions, and force countries to take immediate decisions that may compromise a sustainable green and inclusive recovery. 

In the last three decades, the world made impressive progress when it comes to human development. More than one billion people have risen out of extreme poverty. Despite progress – we had seen that the pace of poverty reduction started to slow down  by 2018. It was projected that at the current rate, 6 percent of the global population would still be living in extreme poverty by 2030, missing the SDG target of ending poverty.

And when we look at the measurements of poverty that go beyond income -- we found that 1.3 billion people around the world across 101 countries were multidimensionally poor – according to the global Multidimensional Poverty Index. Two-thirds of the multidimensionally poor people were living in middle-income countries, with a massive variation within countries. The UN Development Programme (UNDP) and Oxford University are currently updating the calculations of global multidimensional poverty figures in a post-Covid-19 world.

Based on evidence available, we know that the pandemic is further changing the geography of poverty. While the situation will be most dire in low income countries and countries facing fragility, Covid-19 has made clear that all countries are struggling with the effects on the most vulnerable and marginalized – which includes the poorest population.

Across developed and developing countries, the poorest are the hardest hit by the health impacts and the least able to cope with the socioeconomic effects of the pandemic. Worldwide, women, low-waged, informal workers, migrants and refugees are some of the hardest hit by the losses of income. In developing countries, vast majority of informal workers are women.

Global human development, based on the estimates by the UNDP, as the combined measure of the world’s education, health, and living standards — is on course to decline for the first time since the measurement began in 1990. Covid-19 threatens to reverse the human development gains made in the last 6 years.

The economic shocks have hit many developing countries before the health shocks, through macroeconomic transmission channels, and are expected to persist after the health crisis is over.

In this context of uncertainty of evolving impact from the pandemic, estimating a precise number of people that would be pushed into poverty or experience hardship is a complex task. Poverty estimates are projections based on assumptions for economic growth – and the COVID-19 crisis is continuously evolving across the world with multiple spillover effects.

To cope with the crisis, governments are making urgent decisions – which will have serious implications for safeguarding SDG progress or the possibility of meeting the goals in this upcoming decade. These decisions include: providing health care services; expanding social protection and basic services; protecting jobs, SMEs and supply chains; making fiscal and financial resources available for the response; and strengthening social cohesion and community action.

These areas coincide with the five pillars of the UN Socioeconomic Framework for the immediate Covid-19 response launched at the end of April. As part of this effort, the UN is supporting the preparation of a series of country assessments on the socio-economic impacts of Covid-19, including rapid and in-depth assessments of affected economic sectors and population groups. Thus far, 68 countries have produced assessments which are informing the development of UN responses at country level to contribute towards the national response and recovery plans. This process must be viewed as a fluid process, responding to national contexts and evolving over time. 

We all recognize that the Covid-19 crisis has revealed the unsustainability of the pre-pandemic development path. Its socio-economic impacts feed on pre-pandemic vulnerabilities and inequalities across societies, which must be addressed if countries are to build a more resilient future.

Key elements of a recovering better include building up resilience from inception, being people-centered and consistent with international human rights standards, enabling a gradual transition to a low carbon development, and leveraging digital technologies.

As we discuss the options and strategies to eradicate poverty within the Covid-19 context, I would like to highlight five key messages emerging from the country assessments:

First, country context matters. While the pandemic’s economic impact is expected to be sizable globally, it will be felt differently across countries depending on their underlying economic, governance and demographic structures. Most countries are facing grim trade-offs between livelihoods and lives as they aim to mitigate the spread and impact of the Covid-19 crisis.

Trends and patterns emerging from countries’ socioeconomic impact assessments show severe shrinking of fiscal space that are likely to affect investments in needed social policies and programmes, which are much needed to eradicate poverty.

Second, country socioeconomic assessments have been instrumental in identifying blind spots. For instance, many countries have noted data scarcity, and lack of disaggregated data, or inability to collect real-time data due to the lockdown restrictions. Our ability to protect the most vulnerable and marginalized relates to the ability to identify those groups.

Furthermore, an increase in gender-based violence is exposing the urgency to address the deeper and intersectional drivers of gender discrimination and bias, implicit in social norms, laws, policies and everyday behaviour. Data showing the surge on GBV can assist countries to customize their interventions.

Third, we have witnessed across the world – that in many places - the social contract between the state and the population is seeing further erosion. We also see systematically weak judiciary systems, limiting the protection of human rights and access to justice for many. Potential politicization of governments’ response could increase political animosity. Weak and uneven government responses could further undermine the social compact and trust.

Fourth, we must continue making the business case for investments in a green economy to designing and de-risking nature-based solutions as part of a new social safety net for the world, promoting extensive decarbonization, encouraging sustainable public-private partnerships such as in nature-based solutions, and a green economic and finance reset.

We must seize the opportunity to do better. For instance, analysis from the national stimulus packages in Asia and Pacific countries shows insufficient investments in a green recovery.

Fifth, investments on innovation and digital transformation will be required, keeping in mind that we must bridge the digital divide across societies. Closing the internet access gap in low- and middle-income countries is estimated to cost US $100 billion— about 1 percent of the world’s Covid-19 fiscal programmes to date. The upcoming report of the UN Secretary-General’s Task Force on Digital Financing of the SDGs will provide further guidance on this issue.

Dear colleagues,

The pandemic has shown how our lives are intrinsically connected and the need to restore the balance between people and planet.

A Covid-19 recovery needs to look beyond the short-term impacts and explore the second and third order effects. Over time, a global economic recession is expected to unfold with a full-blown financial crisis. The sequencing of policy responses is critical. Appropriate fiscal and financial incentives must lead to income and job creation, and the restoration of livelihoods, targeting the most vulnerable and marginalized groups if we are to succeed in eradicating poverty to chart a future that is sustainable and fairer.

Now more than ever, the 2030 Agenda and the Sustainable Development Goals, and the Paris Climate Agreement, must continue to be our guiding compass towards a sustainable and inclusive recovery.