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Financial Crisis Could Trap 53 Million More People in Poverty

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  • 53 million more people could be trapped in poverty as global economic growth slows
  • Between 200,000 and 400,000 more babies could die each year between now and 2015 if the crisis persists
  • Some 40 countries are "highly vulnerable" to the effects of the crisis

February 12, 2009—The financial crisis is fast becoming a human crisis.

As many as 53 million more people could be trapped in poverty as economic growth slows around the world, according to new World Bank forecasts.

And in a blow to efforts to reduce infant mortality, between 200,000 and 400,000 more babies could die each year between now and 2015 if the crisis persists, the Bank predicts.

The new forecasts precede a meeting of the G7 finance ministers this weekend in Rome.

World Bank President Robert B. Zoellick will be at the meetings. He has urged developed countries to set aside 0.7 percent of their economic stimulus packages for a special Vulnerability Fund for developing countries.

“While much of the world is focused on bank rescues and stimulus packages, we should not forget that poor people in developing countries are far more exposed if their economies falter,” Zoellick said.

Some 40 countries are “highly vulnerable” due to pre-existing high rates of poverty and expected drops in growth.

Millions already living below the poverty line “will be pushed further below the poverty line” as a result of the global financial crisis, according to the new policy note,  “The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens.”

“We know that after the food and fuel crisis of a year ago, the estimates were that we could see an addition of about 100 million people to the ranks of the poor, and we think this crisis, in its severity, will top that,” says World Bank Vice President for Poverty Reduction and Economic Management Danny Leipziger.

Almost one-third (29 percent) of all developing countries are “highly exposed” to the poverty effects of the crisis. Another 62 percent are moderately exposed and face decelerating growth or high poverty levels. Less than one tenth have relatively low exposure, according to the policy note.

“While in the short-run, the nonpoor may be the most affected by the crisis, the adverse impacts are likely to spread in the medium-term to poor households,” the paper says.

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