Up to 580 million new poor people in the world. The social bill for the Covid-19 is likely to be very heavy according to the projections of three economists, taken up by the NGO Oxfam in its latest study, “The Price of Dignity”, published on Thursday 9 April. Stopping entire economies to counter the pandemic “could lead to a leap backwards of a decade in the fight against poverty and, in some cases, a 30-year setback,” warn the authors of this economic model, one of the first to assess the impact of coronavirus on global poverty.
This would be unprecedented in recent history, since the early 1990s, global poverty has been steadily declining. “Even after the 2008 crisis, it was only a question of slowing the decline in the level of poverty,” recalls Robin Guittard, head of international solidarity and inequality issues, contacted by France 24. “I see no historical equivalent to the threat that Covid-19 poses to the most vulnerable populations. This is the first economic crisis of a truly global dimension. Indeed, the financial shock of 2007-08 had, above all, affected the industrialized countries,” points out Andy Summer, an economist at King’s College London, and one of the authors of the economic projections.
The number of new poor people then depends on the poverty line. This would be “only” 85 million more in the most optimistic estimate, which is to anticipate a 5% drop in income and retain only individuals earning less than $1.90 a day. This is little compared to the worst-case scenario, where the quota of those living on less than $3.20 a day would increase by 580 million people if disposable incomes fell by 20% because of the virus. That would be the equivalent of about 6% to 8% of the world’s population who would join the ranks of the poorest, Oxfam notes.
The geographical distribution of these very poor newcomers also varies according to the poverty line chosen. For example, the overwhelming majority of people in South Asia and sub-Saharan Africa would be in extreme poverty because of Covid-19 if only those earning less than $3.20 a day are retained. In contrast, eastern Asia would have the highest number of people forced to survive on less than $5.50 a day. “The economic risk associated with the virus to fragile populations in major Asian economies such as China and India becomes evident when the $5.50-a-day poverty line is raised,” Summer says.
Even if these figures are already dizzying, the researcher warns that the reality could be even worse. Firstly, because these projections only apply to developed countries on the margins. “Indeed, the poverty line is much higher in OECD member states,” notes the British economist. A Frenchman, for example, officially falls below the poverty line when he earns less than 33 euros gross per day (60% of the median wage). So there are a significant number of people who will be pushed into poverty by the standards of the so-called rich countries that are not included in these forecasts, the British economist acknowledges.
Without social protection systems, the poorest countries would be more affected, as would disadvantaged populations, including women. To avoid this, Oxfam recommends direct financial assistance to those most affected and priority support to small businesses by conditioning financial assistance to the largest companies on measures for vulnerable populations. It also calls for the cancellation this year of debt repayments from the poorest countries, citing the example of Ghana, which could “provide $20 a month to each of the country’s 16 million children, disabled and elderly people for six months” if it were freed from debt payments deadlines.
Other recommendations include an increase of at least $1 trillion in special drawing rights (SDRs) from the International Monetary Fund (IMF) to help the poorest countries, increase official development assistance to donor countries now, and the creation of emergency solidarity taxes by taxing extraordinary profits, the largest fortunes. , speculative financial products and activities that have a negative impact on the environment.