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Inflation, COVID plunge 68 million into poverty in Asia

, August 25, 2023, 0 Comments

Health and cost-of-living crises have disproportionately affected the poor and women in developing Asian countries, hurting their chances of long-term improvement.inflation-poverty-covid-asia-marketexpress-in

Higher inflation coupled with the COVID-19 pandemic pushed nearly 68 million people in Asia into extreme poverty as of last year, according to a report published by the Asian Development Bank (ADB).

An estimated 155.2 million people in developing Asia, which is 3.9% of the region’s population, lived in extreme poverty as of last year. This figure was 67.8 million higher than what it would have been without the pandemic and cost-of-living crises, the report said Thursday.

Extreme poverty, based on 2017 prices adjusted for inflation, is defined as living on less than $2.15 (€1.98) a day. Both the pandemic and growing geopolitical tensions have disrupted supply lines in the last few years leading to higher inflation across the world.

While Asia and the Pacific Island states are steadily recovering, the dual crises is “undermining progress toward eliminating poverty,” said ADB Chief Economist Albert Park.

“By strengthening social safety nets for the poor and fostering investment and innovation that creates opportunities for growth and employment, governments in the region can get back on track.”

In 2021, ADB estimated that the pandemic had pushed an additional 80 million people into extreme poverty as of the previous year, when compared to pre-pandemic projections.

Poor and women affected disproportionately

The poor have been hurt most by inflation as they are unable to pay for the higher prices of food, fuel and other necessities. It also erodes their income, leaving fewer savings for healthcare, education or other opportunities which can improve their situation in the long term, the report said.

Women have also been disproportionately affected as they tend to earn less than men while also having to do unpaid work.

Lesser earning aside, the poor end up paying a premium for access to essential goods and services, the ADB said.

“For instance, low-income households often have to buy commodities in smaller quantities, which may be more expensive than buying in bulk. They may also be forced to live in informal settlements where they are exposed to greater health hazards, increasing their health care costs,” the report found.

The report suggested ways that governments in Asia can help address the cost-of-living crisis. This includes strengthening social protection systems, increasing support for agricultural development, improving access to financial services, prioritizing infrastructure investments and promoting technological innovation.

The ADB estimates that almost one in three people among the Asian population, or 1.26 billion people, will be considered economically vulnerable by 2030.