As we approach the third year of the COVID-19 crisis, we deepen our understanding of the pandemic’s impact on poverty and inequality across the globe. World Bank in collaboration with national statistical offices conducted High Frequency phone surveys that provide a window that enables us to analyze the changes in household welfare when other sources of data are unavailable.
Results
The analysis indicates that the pandemic was particularly hard on poor urban households and may have increased inequality in urban areas.
"Extreme poverty increased in 2020 for all countries (Image below). The expected changes in extreme poverty without COVID-19 are presented in the left panel and the simulated changes due to the pandemic are shown in the center panel. The right panel shows the net effect of the pandemic—or the sum of those who would have moved out of extreme poverty in 2020 had the pandemic not happened and those who moved into extreme poverty in 2020 compared to 2019 due to the pandemic. On average, the COVID-19-induced extreme poverty is set to increase by 0.9 percentage points in the 34 countries, and by 1.3 percentage points if we only consider the countries in Sub-Saharan Africa."
Key Findings
- The COVID-19 pandemic has raised global income inequality, partly reversing the decline that was achieved over the previous two decades.
- Weak recoveries in emerging market and developing economies (EMDEs) are increasing between-country income inequality.
- Within-country income inequality is estimated to have increased somewhat in EMDEs because of severe job and income losses among lower-income population groups.
- Rising inflation and pandemic-related disruptions to education may further increase within-country inequality in the longer run.
- Reversing the increase in global income inequality requires a comprehensive set of national policy measures, underpinned by support from the global community.