Rate of Global Extreme Poverty Slows Down – World Bank

Fewer people are living in extreme poverty around the world, but the decline in poverty rates has slowed, raising concerns about achieving the goal of ending poverty by 2030 and pointing to the need for increased pro-poor investments, the World Bank finds.

The percentage of people living in extreme poverty globally fell to a new low of 10 percent in 2015 down from 11 percent in 2013, reflecting steady but slowing progress. The number of people living on less than $1.90 a day fell during this period by 68 million to 736 million.

Despite the tremendous progress in reducing extreme poverty, rates remain stubbornly high in low-income countries and those affected by conflict and political upheaval.

According to World Bank’s 17th edition of the Kenya Economic Update that was released in April 2018 noted that the current monetary and non-monetary poverty indicators in Kenya to be better compared to most Sub-Saharan African (SSA) countries, but continue to lag other lower-middle-income countries. Overall, given Kenya’s income levels and poverty rate, human development indicators were relatively high which meant that Kenya performed better on non-monetary dimensions of poverty.

Kenya has registered growth domestic product (GDP) growth rates above 5 percent for most of the past decade. However, the KEU notes that the transmission of that growth into increased consumption at household level remains low, or GDP growth would have translated into even higher poverty reduction.

About half of the world’s countries now have poverty rates below 3 percent, but the report finds that the world as a whole is not on track to achieve the target of less than 3 percent of the world living in extreme poverty by 2030.

In the 25 years from 1990 to 2015, the extreme poverty rate dropped an average of a percentage point per year – from nearly 36 percent to 10 percent. But the rate dropped only one percentage point in the two years from 2013 to 2015.

The deceleration in global numbers stems mainly from an increasing concentration of extreme poverty in regions where poverty reduction has lagged. A case in point is Sub-Saharan Africa, where, under all but the most optimistic scenarios, poverty will remain in double digits by 2030, absent significant shifts in policy.

Slowing declines in poverty also reflect falling commodity prices, conflict, and other economic challenges for developing countries. The World Bank’s preliminary forecast is that extreme poverty has declined to 8.6 percent in 2018.