Global crisis pushing 35m back into poverty: World Bank

WASHINGTON. April 25. KAZINFORM. The global crisis is pushing some 35 million people back into poverty and vulnerability in Europe and Central Asia, the World Bank said Friday; Kazinform refers to Xinhua.
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Nearly 90 million of the region's 480 million people -- about 18 percent of the population -- have moved out of poverty and vulnerability since 1999. But these gains are at risk as a result of the financial crisis, according to a press release obtained by Xinhua. Today, almost 40 percent of the 480 million are still considered poor or vulnerable. But the number of poor and vulnerable people is now expected to rise throughout the region, increasing by about 5 million people for every 1 percent decline in GDP, says the press release. By the end of 2009, poverty and vulnerability is expected to rise by 5 percent, which means almost 25 million more poor or vulnerable. And this will further increase by an additional 10 million to a total of 35 million people by the end of 2010. In particular, the effects of the crisis are being felt through three key transmission mechanisms -- financial, product, and labor markets. In the financial sector, rollover risks for countries with high current account deficits and volatility in foreign exchange markets have created a highly uncertain environment. Industrial output is down with some countries experiencing double-digit declines in early 2009 compared to a year ago. Unemployment is on the rise with unprecedented job losses in some countries and others poised for double-digit unemployment in the near future. "This will be a deeper crisis than expected, and the forecasts for Eastern Europe and Central Asia may still be too optimistic," said Indermit Gill, Chief Economist for the Europe and Central Asia, World Bank. "Past crises indicate that capital flows do not quickly recover to pre-crisis levels -- so adjustments required are now much larger than anticipated." Social policy actions should be a priority for the region, says the press release; Kazinform cites Xinhua. See www.chinaview.cn for full version.
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