The coronavirus pandemic is widening the wealth gap, with acute poverty and immense wealth both on the rise.
Extreme poverty is set to deepen in 2020, affecting nearly 10 per cent of the world population. By 2021, up to 150 million people may live on less than $1.90 per day, according to a report issued by the World Bank yesterday. In 2013, the World Bank had set a goal of eradicating acute poverty by 2030. This objective is moving out of reach, and risks becoming unattainable unless swift action is taken.
Today, more than 40 per cent of the world population lives on less than $5.50 per day. The combined effects of Covid-19, restrictions to curb its spread, climate change and increased armed conflict have sent extreme poverty rates up for the first time in more than two decades.
The trend is especially pronounced in nations that already suffer from high poverty rates. Eighty-two per cent of the new poor are concentrated in middle-income countries. Saving millions from abject poverty will rely on whether leaders can come up with a long-term vision for post-coronavirus recovery and implement it quickly.
Egypt, Saudi Arabia and the UAE, the Arab world’s three largest economies, have already shown signs of recovery in non-hydrocarbon sectors since September. However, economies of nations in crisis, from Lebanon to Sudan, are set to shrink in the months to come.
Some of the planet’s wealthiest people, meanwhile, have seen their fortunes grow larger since the onset of the pandemic, widening the global wealth gap. Billionaires worldwide have increased their wealth by a record $10.2 trillion from April to July, Swiss bank UBS says. Elon Musk, chief executive of Tesla, has enjoyed the greatest increase in net worth, from $76 billion to $10bn, according to the Bloomberg billionaires index.
The wealthy growing wealthier is not, on its own, concerning news. In the wider societal context, however, it is a sign that wealth creation is concentrated too narrowly in certain pockets. According to the World Bank, average shared prosperity worldwide is likely to stagnate – or even shrink – from 2019 to 2021. Global solidarity and long-term planning for post-coronavirus economic recovery are needed to reverse this trend.
If leaders do not take action now, they risk seeing a lost generation of impoverished youth. Covid-19 has already made it difficult for students to access quality education. Many people do not have access to the internet, or even electricity, and can no longer afford an education because of the economic recession. Low-income workers have been disproportionately affected by job loss, as often they are employed in sectors where it is difficult (if not impossible) to work remotely.
From economic stimulus packages to providing emergency and humanitarian aid to the most vulnerable, world leaders have a responsibility to shield their people from poverty. At the onset of the pandemic, in March, the UAE Central Bank launched an Dh 116bn ($32bn) economic support scheme for businesses affected by the pandemic. More initiatives to bolster the economy were introduced in August, while healthcare has been provided to all those who need it during the pandemic. Few countries are in the same position of ensuring support for those most vulnerable.
Beyond national initiatives, a concerted global effort is required to stop acute poverty from becoming more widespread. Collective action is needed so that years of progress in the eradication of extreme poverty are not lost to the coronavirus.