Recession to push millions to poverty: World Bank

Plummeting economic growth rates will push millions more in the developing countries into poverty and also retard progress in reducing infant mortality, a World Bank research has said.

Estimates for 2009 say lower economic growth rates will trap 46 million more people on less than $1.25 a day than was expected prior to the ongoing global crisis. An extra 53 million will stay trapped on less than $2 a day, the new World Bank research says.

This is on top of the 130 to 155 million people pushed into poverty in 2008 because of soaring food and fuel prices. Preliminary estimates for 2009 to 2015 forecast that an average 2 lakh to 4 lakh more children a year or a total of 1.4-2.8 million, may die if the crisis persists.

These forecasts highlight the serious threat to the achievement of the UN’s Millennium Development Goals (MDGs), which set specific targets by 2015 to overcome poverty.

“The global economic crisis threatens to become a human crisis in many developing countries unless they can take targeted measures to protect vulnerable people in their communities,” said World Bank Group President Robert B Zoellick.

“While much of the world is focused on bank rescues and stimulus packages, we should not forget that poor people in developing countries are far more exposed if their economies falter. This is a global crisis requiring a global solution. The needs of poor people in developing countries must be on the table,” he added.

In a policy note issued in the run up to the G7 finance ministers meeting on Saturday, the World Bank said almost 40 per cent of 107 developing countries were highly exposed to the poverty effects of the crisis and the remainder was moderately exposed, with less than 10 per cent facing little risk.

The policy note, entitled “The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens”, said it was critical for exposed countries to finance job creation, the delivery of essential services and infrastructure, and safety net programmes for the vulnerable.

Yet three quarters of these countries cannot raise funds domestically or internationally to finance programmes to curb the effects of the downturn. One quarter of the exposed countries also lacked the institutional capacity to expand spending to protect vulnerable groups. The note urges financial support in the form of grants and low or zero interest loans for these countries.