Increased Poverty Threshold: World Bank Sets $3 Daily Income as New Poverty Standard per Person.
Changing Times: The latest scoop revolves around the World Bank's recent adjustment to the purchasing power parity (PPP) of countries, effective May 2024. This update, originally based on PPP data from 2017, aims to reflect today's global economic landscape more accurately.
"Catching up with fluctuating worldwide prices plays a crucial role in revising the international poverty line,"World Bank experts explain. By updating the international poverty line, they also furnish the costs of essentials such as food, clothing, and shelter in low-income nations.
The World Bank categorizes those living on less than $3 a day as surviving in "extreme poverty." According to their records, around 838 million individuals were trapped in this vicious cycle in 2022. By 2030, they anticipate that 9% of the global population will still struggle with extreme poverty. However, the organization concedes that this target appears increasingly unreachable.
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Understanding the Update: The World Bank's revised poverty line moved from $2.15 to $3.00 per person per day. This amended threshold is based on the 2021 PPPs, which factor in price discrepancies across nations. A comprehensive review of global price data and national poverty standards was also part of this process[1][3].
This update has directly led to an increase in the global extreme poverty rate, as of 2022, it surged from 9.0% to 10.5%, translating to an escalation in the number of people below the poverty line from 713 million to 838 million[2]. This uptick underscores the significant challenge of diminishing poverty worldwide, with striking regional disparities. For instance, Sub-Saharan Africa witnessed a steep increase in its extreme poverty rate, surging from 37.0% to 45.5% in 2022[2].
In a silver lining, despite the hike in the poverty rate, the World Bank acknowledges that approximately 1.5 billion individuals graduated from extreme poverty between 1990 and 2022, exceeding its previous estimate of 1.3 billion[1]. This suggests that while the number of people living in poverty may have grown, the general descent in poverty prevalence over time remains a positive trend.
Looking forward, forecasts indicate that the global extreme poverty rate is set to retreat slightly, dipping from 10.5% in 2022 to 9.9% in 2025[2].
The World Bank's updated poverty line of $3.00 per day, based on 2021 PPP data, has resulted in a rise in the global extreme poverty rate from 9.0% to 10.5%, affecting more people living in poverty (838 million in 2022). This upward trend in global business and finance, specifically poverty, is a concern for general-news.
