Rise in poverty for the first time in 20 years . . .
In its just-published East Asia and Pacific Economic Update October 2020, titled “From Containment to Recovery,” the World Bank (WB) estimates the COVID-19 pandemic will push 38 million people into poverty in developing East Asian and Pacific countries. This number includes 33 million who would have escaped poverty this year had the pandemic not hit. This will be the first time in 20 years in which poverty will increase in the region. The report covers East Asian and Pacific jurisdictions the WB classifies as ‘developing,’ including China, Southeast Asia, and Pacific Island countries. The report does not cover the region’s ‘developed’ countries, such as Japan, South Korea, Singapore, Australia, and New Zealand. India and other South Asian countries are also excluded.
Not all recoveries will be equal . . .
The WB forecasts East Asia and the Pacific to grow at a meagre 0.9 per cent this year, the region's lowest economic growth rate since 1967. That growth will be highly uneven, as will the pandemic-induced leap in poverty. While China's economy is expected to grow two per cent this year, it is one of only three countries the WB is forecasting to experience economic growth, the others being Vietnam and Myanmar. The WB expects the rest of the region to contract economically by 3.5 per cent in 2020, with Thailand and the Philippines forecast to be among the worst hit. Projections for 2021 are, however, far better. China's economy is forecast to grow by 7.9 per cent, and the whole region will increase by 7.4 per cent.
Setbacks could last a lifetime, especially for the poor . . .
The report highlights other details that suggest the adverse short-term economic effects of the pandemic could reverberate for years. For example, it identifies the layering of “sickness, food insecurity, job losses, and school closures” as potentially leading to “health and learning losses that could last a lifetime.” Here, the poor would be the most negatively affected as they have tenuous access to schools, jobs, hospitals, and finance. Of particular concern is reduced access to schooling, which poses a risk to individuals' future earnings and countries' human capital formation.