Economic crisis adds millions to ranks of poorest

JOHANNESBURG (Reuters) – Last year’s global slump will condemn 53 million more people to extreme poverty and contribute to 1.2 million child deaths in the next five years, the World Bank and International Monetary Fund (IMF) said.

Despite these setbacks, the joint report released yesterday said the overall number of people living on less than $1.25 a day, the definition of “extreme poverty”, would fall to 920 million by 2015 compared to 1.8 billion in 1990.

This puts emerging nations broadly on track to achieve a United Nations “Millennium Development Goal” of halving 1990 rates of extreme poverty by 2015.

However, the 2008-09 financial and economic turmoil and the food price crisis that preceded it in early 2008 mean the prognosis is not so good for a similar drive to cut global rates of hunger and malnutrition.

More than a billion people, or one in six people on the planet, are still struggling to meet basic food needs, leading to increased instances of disease — and ultimately death — in young children and pregnant women, the report said.

World Bank projections cited in the report said 1.2 million children were likely to die between 2009 and 2015 as a result of the two crises.

However, the two institutions concluded the fallout would have been more serious had developing country governments not followed sound macro-economic policies before the crisis, giving themselves room to maintain social safety nets in hard times.

“The financial crisis was a severe external shock that hit poor countries hard. Its effects could have been far worse were it not for better policies and institutions in developing countries over the past 15 years,” IMF Deputy Managing Director Murilo Portugal said in a statement.

“The crisis in the developing world has a potentially serious impact in everyday life since the margin of safety for so many people is so slim in even the best of times.”

The extra millions condemned to hardship come despite a strong recovery forecast in the developing countries of Asia, Africa and Latin America.

The IMF is forecasting growth of 6.3 percent for emerging and developing economies this year and 6.5 percent for next, with much of the impetus coming from Chinese expansion of around 10 percent, and strong performances by India, Brazil and Indonesia.

Sub-Saharan Africa, the poorest region, is likely to expand 4.7 percent in 2010 and 5.9 percent the year after, putting it back on the growth trajectory it enjoyed in the years leading up to the crisis.

Despite its post-millennial spurt, Africa has still lagged behind Asia in cutting poverty, with extreme hardship rates falling only to 51 percent in 2005 from 58 percent in 1990, the report said.

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