GLOBAL PERSPECTIVES | KOMMUNIKATION GLOBAL - 01 | 2009

COVER STORY | TITELTHEMA
Despite the current financial turmoil and sharp slowdown in growth anticipated for this year,
longer-term prospects for developing countries have changed only modestly compared with
the year 2008 forecast, according to the World Bank's Global Economic Prospects 2009.
In part prospects are little changed because a slowdown had already been anticipated, albeit
to a much lesser degree.
The primary reason, however, lies in the longterm
supply potential of developing countries,
which should allow output to recoup the lost
production induced by the coming growth recession
during the first five years of the next decade.
Per capita GDP in developing countries over
the period 2010–2015 is expected to expand at a
relatively rapid annual pace of 4.6 percent,
much faster than the 2.1 percent pace of the
1990s and the 0.6 percent average of the 1980s,
replicating the average performance of this
decade.
Improvements in macroeconomic policies --
lower inflation, relaxation of trade restrictions,
more flexible exchange rate regimes, and lower
fiscal deficits -- have combined with structural
reforms such as privatization and regulatory initiatives
to reduce uncertainty and generally improve
incentives for investment.
Projected future growth rates are higher than
in the 1990s -- and much more so than in the
1980s) -- in every developing region except East
Asia and the Pacific, where growth is expected
to decline somewhat because of an aging population.
Rapid growth
Rapid growth should enable developing countries,
as a group, to achieve the Millennium Development
Goal of halving poverty by 2015.
The poverty forecast for 2015 is 15.5 percent,
well below the target of 20.9 percent—half of
the revised 1990 level as explained in more detail
below.
The East Asia and Pacific region has clearly surpassed
its individual target, and South Asia is on
target. The main concern remains Sub-Saharan
Africa.
Although the incidence of poverty in the region
has been declining over the past decade,
at about 37.1 percent in 2015, the share of
people living in extreme poverty will remain
well above the region’s target of 29 percent
(see poverty table on page 16).
This year’s poverty forecast is consistent with
the World Bank’s revised poverty estimates for
developing countries.
The new poverty estimates largely result from
a revision of purchasing power parities (PPP) by
using a new International Comparison Project
survey of prices paid by households.
The 2005 survey improved on the 1993 data
and methods used to prepare previous estimates.
The new price data reveal that the cost of living
is higher in low-and middle-income countries
than had been suggested by past surveys.
Other factors influencing the changes to the
poverty estimates include revisions to national
accounts and the incorporation of new and
more recent household surveys.
The new poverty estimates provide a significantly
different picture of global poverty - back
to 1990 and in the most recent year, 2005.
Global poverty in 1990, the benchmark year for
the MDGs, is now estimated to have been 41.6
percent of the developing country population
(compared with the previous estimate of 28.7
percent using the old prices and guidelines).
This implies that the target for the poverty
MDG is 20.9 percent, rather than the previous
14.4 percent.
The revisions had a significant affect on all
regions, except Latin America and the Caribbean,
which saw only minor adjustments.
The case of China is illustrative. The headcount
index for 1990 jumped from 33 percent to
60.2 percent.
This dramatic change was attributable mainly
to the poor price comparison basis for the earlier
estimate rather than to any underlying
change in China itself.
The combination of a new estimate of mean
consumption and a new poverty line also implies
a change in the starting value of the growth-topoverty
elasticity.
Even if the shape of the income distribution is
broadly the same as in earlier income surveys
(as is the case for many countries), the fact
that the poverty line intersects the distribution
at a different spot means that the impact of a
given increase in per capita incomes has
changed.
Nevertheless, the rate of improvement in the
headcount poverty rate between 1990 and 2005
has not changed that much using the new estimates.
This year’s forecast reports an annual decline in
global poverty between 1990 and 2005 of some
3.3 percent, which is very close to the earlier
estimated annual decline of 3.2 percent.
However, the higher poverty level means that
25.2 percent of the developing world’s population
was living on less than $1.25 a day in 2005,
compared with last year’s estimate of 18.1 percent
for 2004.
As before, much of decline in global poverty
between 1990 and 2005 results from increased
incomes in China, where the level of extreme
poverty fell from over 60 percent in 1990 to less
than 16 percent in 2005. It should be noted that
the impact on the poverty forecast of the recent
rise in food and energy prices is not fully
reflected in these projections, which largely reflect
neutral changes in per capita incomes.
The increase in food prices between January
2007 and January 2008 is likely to have increased
global poverty by between 130 million
and 155 million people, or by 1.3–1.5percentage
points. With prices now declining but not expected
to return to their earlier levels, at least
some of this deterioration is likely to be permanent.
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GLOBAL PERSPECTIVES | JANUARY 2009 17