We are just now discovering how devastating COVID-19 has been for the very poor
To cope with the pandemic, Asia’s poor are missing meals and selling their assets. Governments need to target policies toward the most vulnerable in order to stave off long-term damaging impacts.
Disruption in economic activity due to the COVID-19 pandemic increased the extreme poverty rate in the 35 developing countries in Asia that we studied by about 2 percentage points in 2020, compared to a scenario without COVID-19. In terms of the number of poor, the increase in the $1.90 poverty rate corresponds to roughly 75 million to 80 million more extremely poor people.
People across developing countries in Asia relied on various coping strategies to manage financial difficulties caused by the COVID-19 pandemic, but some of these strategies may cause adverse effects in the long term and could be potentially costly.
Lower-income households were more likely to experience pronounced declines in their expenditure, which signals increasing inequality. The pandemic has been more devastating for these poorer households, perhaps due to substantial job losses and limited access to social safety nets. This has contributed to lower consumption by the bottom 40%—suggesting that extreme poverty could be much higher than we anticipated when first looking at the pandemic’s impact.
Some strategies commonly adopted by disadvantaged groups, such as eating less and selling productive assets, can lead to lower accumulation of human and physical capital. These coping mechanisms may have long-term harmful effects and may perpetuate the cycle of poverty while increasing inequality.
Loss of productive assets may drive households further into debt. Poor nutrition due to food poverty can impede cognitive development in children and make them less interested in going to school. Nutritional deficiencies during childhood are also associated with increased susceptibility to metabolic illnesses in adulthood.
In some countries, where a significant number of people have resorted to coping strategies that may lead to long-term scarring, the proportion of people covered by at least one social protection benefit is relatively low.
This blog post was based on Key Indicators for Asia and the Pacific 2021.