The Philippines registered the largest increase in income inequality during the pandemic, the World Bank said in its latest Poverty and Shared Prosperity Report.
“The poorest countries were less likely to experience a meaningful decrease in inequality. The largest increase in the Gini index was observed in the Philippines, while the largest decrease occurred in Armenia,” the World Bank said Thursday.
Gini index is a widely recognized measure of inequality. The Gini index was available from estimates based on actual survey data, tabulated income statistics from national statistical offices, imputed values based on data from household surveys and phone surveys or estimates.
Globally, 34 of 78 countries included in the study had falling inequality, compared with 13 with rising inequality. In 31 countries, the Gini index was essentially unchanged, the World Bank said.
The World Bank said during the pandemic, large and unequal job and income losses were reported, contributing to concerns about rising inequality within countries.
It said the poorest people bore the steepest costs of the pandemic, with income losses averaging 4 percent for the poorest 40 percent, double the losses of the wealthiest 20 percent of the income distribution. Global inequality rose, as a result, for the first time in decades, it said.
“Within-country inequality increased in as many countries as it declined, but after decades of convergence, global inequality increased. The poorest have also suffered disproportionate losses in health and education with devastating consequences,” it said.
The world would also unlikely meet the goal of ending extreme poverty by 2030 absent history-defying rates of economic growth over the remainder of this decade, according to the World Bank report. It said COVID-19 dealt the biggest setback to global poverty-reduction efforts since 1990 and the war in Ukraine threatens to make matters worse.
It estimates that the pandemic pushed about 70 million people into extreme poverty in 2020, the largest one-year increase since global poverty monitoring began in 1990. As a result, an estimated 719 million people subsisted on less than $2.15 a day by the end of 2020.
“Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth,” said World Bank Group president David Malpass.
“Of concern to our mission is the rise in extreme poverty and decline of shared prosperity brought by inflation, currency depreciations and broader overlapping crises facing development. It means a grim outlook for billions of people globally,” Malpass said.
“Adjustments of macroeconomic policies are needed to improve the allocation of global capital, foster currency stability, reduce inflation, and restart growth in median income. The alternative is the status quo—slowing global growth, higher interest rates, greater risk aversion, and fragility in many developing countries,” he said.
The report noted that in Asia, young, female and less skilled workers suffered the brunt of the job losses in Indonesia, Malaysia, the Philippines, Thailand and Vietnam in the second quarter of 2020 based on data from the Asian Development Bank.
“Over the next decade, investing in better health and education will be crucial for developing economies, given the severe learning losses and health-related setbacks they suffered during the pandemic,” said Indermit Gill, the World Bank chief economist and senior vice president for Development Economics.
“In a time of record debt and depleted fiscal resources, this will not be easy. Governments will need to concentrate their resources on building human capital and maximizing growth,” Gill said.
The new report is the first to provide current and historical data on the new global extreme-poverty line, which has been adjusted upward to $2.15 a day to reflect the latest 2017 purchasing-power-parity data.
Extreme poverty fell dramatically across the world from 1990 through 2019, the latest year for which official data are available. But progress slowed after 2014, and policymakers now confront a tougher environment: Extreme poverty is concentrated in parts of the world where it will be hardest to eradicate—in Sub-Saharan Africa, in conflict-affected areas, and in rural areas.