Global Poverty: A complex challenge worsened by recent crises

In recent years, the world’s poorest countries have seen a series of crises that have exacerbated their already dire economic situations. Countries like Burundi, South Sudan, and the Central African Republic have long been plagued by civil wars, ethnic conflicts, and sectarian warfare, which have resulted in ongoing poverty and misery. In this article Kazinform News Agency correspondent looks into the latest World Economic Outlook 2024 addressing global poverty.

According to the economic report, fragile economies of poor countries were destabilized by external shocks like the COVID-19 outbreak, soaring inflation, and the ongoing conflict in Ukraine, which exacerbate these internal problems. The distribution of wealth throughout the world is widely unequal. While some countries enjoy prosperity, others struggle with significant economic challenges.

For example, years of political unrest and violence have had such an impact on Afghanistan, Syria, and Eritrea that obtaining reliable economic data is nearly impossible in these countries. This makes assessing and addressing their poverty even more challenging.

When determining which nations are the poorest, economists frequently use GDP per capita, taking into account purchasing power parity (PPP) to account for variations in living expenses and inflation.

This method contributes to a more accurate evaluation of the purchasing power of individuals in various countries. However, identifying the root causes of poverty is complex. Factors such as corrupt governance, a history of exploitative colonialism, weak rule of law, environmental challenges, and external aggression all play significant roles in perpetuating poverty.

The percentage of people worldwide living in severe poverty, or less than $1.90 per day, has dropped from more than 35% in 1990 to less than 10% prior to the Covid-19 pandemic. The World Bank estimated that an additional 198 million people were likely to have fallen into the category of the extremely poor between the start of the health emergency and the end of 2022, when the International Poverty Line (IPL) was revised to $2.15 due to rising living expenses.

The COVID-19 pandemic not only halted this progress, but reversed it. More recently, the institution has also stated that half of the world’s 75 most vulnerable countries are facing a widening income gap with the wealthiest economies for the first time in this century.

Over the previous two decades, there has been a broad consensus that richer and poorer countries will eventually see progressive economic convergence since lower-income countries have historically improved their living standards more quickly than mature economies. However, one out of three in this particularly vulnerable group of 75 countries, home to a quarter of humanity (1.9 billion people), today is poorer than it was on the eve of the Covid-19 pandemic.

The statistics are striking: the average annual per-capita purchasing power in the top ten wealthiest nations is over $110,000, while it is less than $1,500 in the bottom ten. The worst part is that poverty frequently contributes to more poverty.

As shown in the most recent World Economic Outlook report, the International Monetary Fund (IMF) explains how impoverished nations could slide further into hardship: “The growth decline implies worsening prospects or living standards and global poverty reduction. An entrenched low-growth environment, coupled with high interest rates, would threaten debt sustainability and could fuel social tension and hinder the green transition. Furthermore, expectations of weaker growth may deter investment in capital and technologies and so, in part, become self-fulfilling.”

The World Economic Outlook report also provides a ranking and GDP per capita (PPP) for Central Asian countries, highlighting their economic standings. Here’s a summary of the data presented:

1. Tajikistan - 43^rd place with a GDP-PPP of $5,832, reflecting its position among lower-middle-income countries;

2. Kyrgyz Republic – 48^th place with a GDP-PPP of $6,790, indicating slightly better economic conditions compared to Tajikistan;

3. Uzbekistan – 67^th place with a GDP-PPP of $10,936, showcasing a middle-income status;

4. Azerbaijan – 98^th place with a GDP-PPP of $19,328, illustrating a higher economic capacity comparing to its neighbors listed above;

5. Turkmenistan – 101^st place with a GDP-PPP of $19,729, indicating a similar economic level to Azerbaijan;

6. Kazakhstan - 128^th place with a GDP-PPP of $34,534, representing the highest economic status among the Central Asian republics;

7. Turkiye – 140^th with a GDP-PPP of $43,921, marking it as the economically strongest in the group.