Corona Briefer Addresses Coronavirus and Poverty

Corona Briefer Addresses Coronavirus and Poverty

The United Nations and the development banks are sounding the alarm. The coronavirus crisis hits millions of impoverished people. Unemployment is rising, and humanitarian aid is facing shortages.

The world will become noticeably poorer in the next year. As a result, more people have to fight to survive. For the first time since 1998, the year of the Asian financial crisis, extreme poverty will rise again worldwide. The United Nations estimates that up to 150 million additional people around the world will fall into extreme poverty. Extreme poverty is when a person has less than $ 1.90 a day to spend.

"The crisis is far from over," said António Guterres, Secretary-General of the United Nations. In their Global Humanitarian Overview 2021, the United Nations points out that this year the world is experiencing "the greatest decline in per capita income since 1870". In parts of Africa alone, economic output per capita will fall back to 2007 levels next year.

The "factory of the world," the developing countries of Asia, could lose up to 9% of their economic output, warned Yasuyuki Sawada, chief economist of the Asian Development Bank (ADB) in Tokyo. In southern Asia, dominated by India, the decline could even be almost 16% - which means a loss of 539 billion dollars. Even in the coming year, it could still amount to a further 6.3% for all developing countries in the Indo-Pacific.

Unemployment rises dramatically

Unemployment is rising dramatically, according to the United Nations. In the second quarter of this year alone, the world lost as many working hours as 495 million full-time jobs due to coronavirus. The ADB economists have calculated that coronavirus could cost up to 166 million jobs in Asia. "The migrant workers are hit particularly hard," said Sawada. He fears they will lose a fifth of their earnings or up to $53 billion. Hundreds of millions of families in China, India, Bangladesh, and the Philippines are fed with this money.

"The declines will particularly hurt the informal sector. Almost 80% of the estimated 2 billion people who work informally have been hit hard by the loss of working hours," said the United Nations. Covid will drive an additional 78 million people into extreme poverty in Asia alone, said Sawada of the ADB. This means that around half of the recently extremely poor that the UN expects to live in Asia. Besides, some have to eke out their lives on less than $3.20 a day, a figure that defines the poverty line. The number of poor will increase by 162 million people in Asia, according to the Development Bank.

Humanitarian aid funds are facing major bottlenecks

Help is becoming more and more difficult. Because not only the ADB fears a wave of company failures. The central bank of the wealthy city-state of Singapore also warned on Tuesday: "The corporate debt has risen from an already high level." The ADB said the amount of non-performing loans in the growth region has tripled to $214 billion. "The answers to coronavirus are a burden on the state coffers and increase the debt," warned Sawada. "At some point, however, the states will have to cut their spending again."

The United Nations takes the same horn: "Funds for humanitarian aid are facing major shortages as the effects of the global pandemic continue to worsen." The United Nations has already raised less than half of the $35 billion in its fight against hunger and poverty.

The bottlenecks come at a time when even more help is needed: With a view to the entire world, the UN warned that around 235 million people would need support in 2021 to get food, water, and sanitation. "Without rapid political action, the global poverty rate could soar to 7% by 2030, compared with an expectation of 3% from the pre-corona era," the report says.