Turning back the Poverty Clock: How will COVID-19 impact the world’s poorest people?
The release of the IMF’s World Economic Outlook provides an initial country-by-country assessment of what might happen to the world economy in 2020 and 2021.
Using the methods described in the World Poverty Clock, we ask what will happen to the number of poor people in the world—those living in households with less than $1.90 per person per day in actual or imputed spending—given this new economic forecast.

We take the difference between the IMF’s April 2020 forecasts for GDP growth and their forecast from October 2019 as “the COVID effect,” a slight simplification because other things have also changed in the world that may have caused the IMF to alter its forecasts. However, the largest change is clearly caused by COVID-19 and the policy response around the world.

The summary result is that some 690 million people are likely to be in poor households in 2020, compared to our previous estimates of 640 million people. (A careful reader might note that the World Poverty Clock had been estimating about 600 million in poverty in 2020, but newly updated population estimates, new household expenditure data, and new household survey data have also been incorporated into the model. We don’t count those changes as part of the COVID effect, however.)

Our post-COVID-19 estimate is that extreme poverty in the world will rise this year by about 50 million people compared to the original 2020 forecast, and by 40 million people compared to our 2019 estimate. This is right in the middle of the range estimated by a team of World Bank economists—40 million to 60 million more poor people. This is not surprising as we are using very similar methodologies and data. The number is, however, far smaller than the estimates put forward in one scenario by Sumner and co-authors, who suggested that poverty could rise by 420 million to 580 million people, a figure that has been picked up by the media and advocacy organizations as “half a billion.”

All these estimates have a high degree of uncertainty and yet COVID-19 has attacked relatively advanced economies where the absolute numbers of extreme poor are small. If we were looking at the impact of COVID-19 on poverty as defined by national poverty lines, the number would be far higher. We also have little real-time information on how lockdowns will affect income distribution, or about how effective government efforts to strengthen safety net programs are likely to be. COVID-19 may be less disruptive to subsistence farmers, who are heavily represented among the extreme poor than to urban workers who may be vulnerable to income losses but whose initial living conditions were better.

Bearing this in mind, if we accept the IMF scenario for 2020, it suggests that all the progress in reducing poverty since the launch of the Sustainable Development Goals (SDGs) in September 2015 has been lost. We will enter the U.N. Decade of Action with the same distance to travel on poverty reduction, but only ten years in which to do it.

To put this into context, 2020 will be the first time this century that the number of poor people will rise, a fact which can be seen in real time as the World Poverty Clock ticks “backward.” This comes after a spell of poverty reduction averaging almost 100 million people per year between 2008 and 2013. And even though the escape rate out of poverty had fallen recently, with poverty becoming more concentrated in fragile states where progress has been harder to achieve, there was still movement in the right direction.

COVID-19 has seriously affected these trends in ways that are still not clear-cut. The figures below try to identify the most seriously affected countries. Figure 1 shows 12 countries that are likely to see an increase in poverty of over 1 million people in 2020 as a result of COVID-19. They are in Asia and Africa, with Brazil as the sole exception. India and Nigeria stand out as likely to add 10 million and 8 million to the poverty rolls in 2020. In all these countries, COVID-19 has demonstrated the vulnerability of people who have only recently been able to escape poverty.