Progress undone by pandemic
The Covid-19 pandemic has stalled the growth of middle classes internationally and sharply increased poverty. This is the key finding of an analysis published by the Pew Research Center recently. It is based on World Bank data.
From 2019 to 2020, the global middle class remained nearly unchanged in size, amounting to around 1.32 billion people in 2020 (compared to 1.34 billion in 2019). From 2011 to 2019, however, it had kept growing by an annual 54 million people on average. Similar growth had been expected for 2020, the Pew authors write, but that did not happen due to the pandemic. The data analysts reckon that the middle class now makes up 17.1 % of the global population, not the expected 17.8 %. In this context, middle-class members are defined to have a purchasing power of between $ 10 and $ 50 per person and day.
Of the world regions where the middle class decreased, it did so most significantly in South Asia as well as East Asia and the Pacific. In both regions, it was comparatively smaller than in Europe and North America. On the other hand, one third of the global middle class lives in China, which did not suffer a severe economic contraction because of coronavirus.
Poverty, on the other hand, increased substantially in 2020, amounting to 803 million and thus 131 million people more than expected before the pandemic. According to the Pew study, they now make up about 10 % of the world population. Two dollars purchasing power per head and day is the poverty line.
Before the pandemic, the share of people concerned was predicted to sink from nine percent to a record low of 8.7 %. Covid-19 has thus undone progress made in the fight against poverty. It is now back almost at the level of 2017, according to Pew. From 2011 to 2019, on average, 49 million people escaped poverty every year. The sharp increase in poverty is centred on South Asia (plus 78 million people) as well as sub-Saharan Africa (plus 40 million people).
The number of people living on $ 50 per day or more has decreased, amounting to an estimated 531 million worldwide – 62 million below the pre-pandemic projection. Between 2011 and 2019, this tier had been growing by an average of 15 million per year. The pandemic has thus hit the economic prosperity of high-income people too.
Absolute poverty remains a huge global issue. At the end of last year, nearly 690 million people were suffering from chronic hunger and 135 million people were experiencing acute food insecurity, according to the most recent edition of the Global Hunger Index (GHI). It is compiled every year by the two civil-society organisations Welthungerhilfe (Germany) and Concern Worldwide (Ireland).
Oxfam, the international non-governmental agency, tells a similar story. Its report titled “The inequality virus” assesses the impact of the Covid-19 pandemic, concluding that, although there was progress in poverty reduction over the past two decades, levels of inequality were high even before the pandemic, according to Oxfam, but coronavirus has most likely exacerbated the matter. It notes that the wealth of the top 1000 billionaires has recovered to pre-pandemic levels within nine months. Between March and December 2020, billionaires’ wealth even grew by $ 3.9 trillion.
According to the World Bank, about half of the world population live on less than $ 5.50 per day. The Oxfam study reckons that the number of people who are poor in this sense may well have increased by between 200 and 500 million in 2020.
Oxfam International, 2021: The inequality virus.
Pew Research Center, 2021: The pandemic stalls growth in the global middle class, pushes poverty up sharply. March 2021.
Welthungerhilfe and Concern Worldwide, 2020: Global Hunger Index.
Maren van Treel is a journalistic trainee and works for FAZIT Communication.
Rishikesh Thapa is an intern at D+C/E+Z.