The economic crisis is likely to adversely impact progress toward all MDGs, both until 2015 and beyond. The lasting impact on human development indicators such as health and education will not be overcome even by a strong economic recovery.
Whether the recovery is strong or weak, the world is likely to meet the MDG target of halving its income poverty rate using the international poverty line of $1.25 a day. However, there are considerable regional variations. Sub-Saharan Africa poses the greatest challenge, as it has high poverty rates and is currently off-track on its poverty reduction target at the regional level.
Countries can achieve better development outcomes through improved policies, most notably shifts in expenditures, increases in domestic revenue, and better service delivery.
But stronger policies are unlikely to fully compensate for the effects of slower growth. Better development outcomes will thus depend on the speed at which the global economic recovery supports increases in developing countries’ export revenues and external finance.
The Global Monitoring Report (GMR) 2010 analyzes risks to the MDGs under three global scenarios for GDP growth in developing countries after the financial crisis:
The post-crisis trend assumes a relatively rapid economic recovery in 2010, with strong growth continuing into the future. This is the report’s base case forecast.
The pre-crisis (high growth) trend gives the forecast path for the MDGs if developing countries had continued their impressive growth performance during 2000–07, the period just before the global economic crisis. The impact of the crisis on the MDGs can thus be measured by comparing the post-crisis trend scenario with this one.
The low growth scenario assumes that things that got worse because of the crisis will remain so in the medium run. There is little or no growth for about 5 years, and growth recovers slowly thereafter.
Outlook for poverty
In all these growth scenarios, the world is likely to meet the MDG target of halving its headcount poverty rate using the international poverty line of $1.25 per day. However, the poverty rate in 2015 is considerably higher in the low growth scenario (18.5 percent) than in the post crisis trends one (15 percent), which assumes a rapid recovery from the crisis.
There is considerable variation in poverty rates among developing regions
Even in the low-growth case East Asia and Pacific exceeds its poverty target, in large part because of China’s success in reducing poverty.
South Asia, on the strength of India’s achievement, meets the poverty target in the post-crisis trend scenario but not in the low-growth scenario.
Middle-income countries in Europe and Central Asia are projected to miss the poverty reduction MDG at poverty lines of both $1.25 and $2 per day, the latter line being more meaningful for this group of countries.
The crisis will have serious costs and gaps for other human development indicators such as those related to health and education. These impacts will not vanish in the near future.
The negative impact of slower growth on the MDGs increases in the long term. Moreover, some impact on some MDGs such as the health goals and gender parity has a multiplier effect. For example, fewer girls being educated now will eventually mean that women of child-bearing age will have less education. And malnutrition among children and pregnant women accounts for more than a third of the disease burden of children under age five and over 20 percent of maternal mortality.
According to World Bank post-crisis trend projections for 2015, as a result of the crisis:
For the period from 2009 to the end of 2015, an estimated 1.2 million additional deaths may occur among children under five due to causes linked to the financial crisis.
In 2015, 350,000 more students may be unable to complete primary school.
In 2015, some 100 million more people may remain without access to safe drinking water.