The end of progress against extreme poverty?

In the last decades, the world has made fantastic progress against extreme poverty. In 1990, 2.3 billion people lived in extreme poverty. Since then, the number of extremely poor people has declined by 1.5 billion people. This means on any average day in the last 35 years, about 115,000 people left extreme poverty behind.

Can we expect this rapid progress to continue?

Unfortunately, we cannot. Based on current trends, progress against extreme poverty will come to a halt. As we’ll see, the number of people in extreme poverty is projected to decline, from 831 million people in 2025 to 793 million people in 2030. After 2030, the number of extremely poor people is expected to increase.

Extreme poverty declined in the last three decades because, back in the 1990s, the majority of the poorest people on the planet lived in countries that subsequently achieved very fast economic growth. In Indonesia and China, more than two-thirds of the population lived in extreme poverty. But these economies then grew rapidly, so that by today, the share has declined to less than 10%. Other large Asian countries — including India, Pakistan, Bangladesh, and the Philippines — also achieved strong growth, and as a consequence, the share living in extreme poverty declined rapidly. Much of the progress happened in Asia, but conditions in other regions improved too: the share living in extreme poverty also declined in Ghana, Cape Verde, Cameroon, Panama, Bolivia, Mexico, Brazil, and many other countries.

What is different today is that the majority of the world’s poorest people are stuck in economies that have been stagnating for a long time. Based on current trends, we have to expect the end of progress against extreme poverty.

The chart also shows how the geographic distribution of poverty has shifted. Three decades ago, most extremely poor people lived in Asia; today, most are in Sub-Saharan Africa. In the coming years, this trend is expected to continue. Growth in Asia will largely end extreme poverty in the region, while the economic stagnation and population growth in several African countries will mean that the number of people in extreme poverty there will stagnate or even increase.

Based on current growth, we can be optimistic that the world will continue to make progress relative to higher poverty thresholds. The number of people living on $5 or $10 a day will likely continue to decline.