Income Poverty

The World Bank just updated its estimates of the number of people living in poverty to 1996 and 1998, using 1993 Purchasing Power Parities (PPP) and household survey data (see Table 1 and Table 2). The figures for 1998 are preliminary estimates, based on the most recent survey data available (only a few surveys are available for 1997 and 1998) and actual or estimated growth rates in real private consumption per capita; they will be firmed up as new survey data become available. What story do the new figures tell? First, both the share of opulation and the number of people living on less than a dollar a day declined substantially in the mid-1990s, after increasing in the early 1990s. The same is true for those living below two dollars a day. But the numbers rose again in the aftermath of the global financial crisis. The declines in the numbers are almost exclusively due to a reduction in the number of poor people in East Asia, most notably in China. But progress was partly reversed by the crisis, and stalled in China. In South Asia, the incidence of poverty (the share of the population living in poverty) did ecline moderately through the 1990s but not sufficiently to reduce the absolute number of poor. The actual number of poor people in the region has been rising steadily since 1987. In Africa, the share declined and the numbers increased as well. The new estimates indicate that Africa is now the region with the largest share of people living below $1/day. In Latin America the share of poor people remained roughly constant over the period, and the numbers increased. In the countries of the former Soviet bloc, poverty rose markedly-both the share and the numbers increased.