How much has COVID-19 turned back Asia’s poverty clock?
Without the right policies and programs, Asia’s poorest people could suffer needlessly as economies bounce back after the pandemic.
Developing countries in Asia have had an impressive poverty reduction scorecard. Over the past three decades, the region saw the number of people living in extreme poverty drop from about 1.5 billion in 1990 to 263 million in 2015. The percentage of people living in extreme poverty in these areas fell from 54.5% to just 6.9% during a 25-year period.
The 2020 Asian Development Outlook Update estimates that the gross domestic product of developing countries in the region will contract by roughly 0.7% in 2020, marking the first recession in the region in nearly six decades, with an economic recovery expected the following year at 6.8% GDP growth.
Our research indicates that without the COVID-19 pandemic, the number of poor in developing countries in Asia would have continued to decline. However, the global health crisis that we are confronting now is threatening to reverse this trend as it ravages economies all over the world.
Under a baseline scenario of a 2020 without COVID-19, the region would have seen a steady reduction in poverty rates and number of poor, in line with the experience over the past two decades. For example, there would be an estimated 114 million living in extreme poverty (under $1.90 per day) and 734 million living below $3.20 a day. These figures increased by 78 million and 162 million, respectively, due to COVID-19.
As there is quite a divergence in the economic impact across developing countries in Asia, some regions also expect to have their poverty clocks turned back faster or slower than others.
Should the crisis be less devastating for most households (for example, the rural poor who tend to depend more on farming and local economies), and be accompanied by swift relief programs of the needed magnitude, the poverty impacts of COVID-19 will be correspondingly lower. On the other hand, if COVID-19 pandemic drags longer than expected, derailing economic recovery, and if distribution of safety nets is not implemented efficiently, poverty numbers could be much higher than what we initially anticipated.
These caveats highlight the importance of having accurate, granular, timely, and more nuanced data, not only while the pandemic is unfolding, but also as we rebuild our economies during a post-pandemic period. Having empirical information about the poor, such as who and where they are and up to what extent their livelihoods have been affected by COVID-19, is particularly important to ensure that assistance programs can be well-targeted and tailored to their needs.
The poor were already struggling before COVID-19 broke out, often unable to put enough food on the table, and provide necessities for the family. Some people had jobs that helped them make ends meet before COVID-19 but lost their income during the pandemic. These varying circumstances could potentially require different programs. Data should be a key input in redesigning social safety nets to fight both chronic and transient poverty in the post-pandemic era.