WB: 64 Mln People to Live in Extreme Poverty by 2010

Because of the global financial crisis and ensuring global recession, some 64 million more people will be living in extreme poverty by 2010, the World Bank said in a report released on Tuesday.

The crisis and recession have substantially increased the challenge of meeting the Millennium Development Goals (MDG) targets, according to the World Development Indicator (WDI) 2010 released by the Bank.

During 2000-2008, low and middle income countries averaged economic growth of 6.2 percent a year, and during 1999-2005 the number of people living on less than US$1.25 a day fell by 325 million.

In contrast to the record growth in 2000-2007, the global economy grew only 1.9 percent in 2008 and declined an estimated 2. 2 percent in 2009, the most severe recession in 50 years.

As a result, "some 64 million more people will be living in extreme poverty by 2010 because of the crisis. The effects on human welfare may be costly and long-lasting," said the WDI.

The effects of the crisis were transmitted from high-income economies to developing economies as exports, private capital flows, commodity prices, and workers' remittances declined.

Global trade, whose growth had slowed to 3 percent in 2008, declined an estimated 12 percent in 2009. Developing economies' trade shrank an estimated 9 percent in 2009, according to the report.

Private capital flows to developing economies, after peaking at nearly US$1 trillion in 2007 -- dropped to US$765 billion in 2008 and are estimated to have been much lower in 2009.

Workers' remittances were more resilient, falling 6.1 percent to US$317 billion in 2009, but varied by country, said the WDI.

Among developing country regions, Europe and Central Asia fared the worst, as GDP fell 6.2 percent. Severe economic adjustments were necessary as private capital flows, which had financed large current account deficits, were cut from US$97 billion in 2007 to US$50 billion in 2008, said the WDI.

Latin America and the Caribbean economies contracted 2.6 percent, with Mexico, relying almost solely on the U.S. market for its exports, the worst off.

The report also pointed out that China and India managed to continue growing at nearly the same rate as before the crisis, but noting that other economies in Asia did not do as well.

Meanwhile, Growth in the Middle East and North Africa dropped to 2.3 percent on lower oil prices and exports to Europe. Sub- Saharan Africa barely grew, hurt by falling export commodity prices, falling remittances, lower tourism revenues, and declining private capital flows.

"Home to 30 of the 43 low-income economies, Sub-Saharan Africa has been subject to the most severe consequences of the crisis," said the WDI. "Low-income households, at risk of being pushed into poverty, have suffered from deteriorating health and lost education opportunities."

(Xinhua News Agency April 21, 2010)