World Bank: POVERTY UP despite economic growth in developing

Tom Boland (
Tue, 14 Dec 1999 19:08:51 -0800 (PST)

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If poverty is growing there, how can a nation be said to be "developing"?
Are there any economists out there who can disabuse me of my confusion?
FWD  Yahoo! Asia - News - World - Wednesday, December 8, 1999 5:01 AM SGT



Developing countries should see an economic growth spurt of 2.7 percent
this year and 4.2 percent in 2000 but efforts to combat poverty are
foundering as the numbers of poor increase, the World Bank reported here

"The picture that emerges at the turn of the century is one of stalled
progress for the poor and of rising numbers of poor people in most
developing regions," the Bank said in its annual review of economic
prospects in developing countries.

The number of people living on less than one dollar a day in 1998 -- 1.2
billion -- was virtually the same as in 1987, according to the
report.</p><p>While the poor as a share of population as well as the number
of people existing on less than a dollar a day declined substantially in
the mid 1990s, the 1997-1998 global financial crisis arrested the trend.

Preliminary estimates suggest there have been no further declines in world
poverty since 1996, the Bank said.

While prospects for gains in the battle against poverty between now and
2015 are good in east Asia, south Asia, eastern Europe, central Asia, the
Middle East and North Africa, the number of poor are expected to increase
in sub-Saharan Africa even if growth projections are achieved, according to
the report.

Latin America is also unlikely to make substantial headway against poverty.

The Bank said the future of poverty reduction will depend on changes in per
capita consumption and most importantly on whether or not increased wealth
is equally shared.

"If average per capita consumption levels increase equally for all -- the
poor as well as the rich -- then the share of those consuming less than the
threshold (one dollar a day) will decline," according to the report.

"If consumption levels increase for the rich only, then the share of the
poor will remain unchanged."

But the World Bank was tentatively optimistic about the near-term growth
prospects for the developing world, excluding countries in transition.

Output is predicted to increase 2.7 percent this year, 4.2 percent in 2000
and 4.5 percent in 2001 -- slower than before the outbreak of the Asian
financial crisis in July 1997.

"While the global economy is clearly on the mend and the developing
countries are recovering faster than we thought, the fact remains that many
developing countries remain in a very difficult situation," said Uri
Dadush, director of the World Bank development prospects group.

"Developing countries are doing better but they are not doing well," Dadush

The major threat hanging over the rebound is uncertainty about the future
of the US and Japanese economies, both of which are considered to be
critical to sustaining momentum elsewhere in the world.

A sharp correction in US growth and a turnaround in the nascent Japanese
recovery could restrict the capacity of both markets to absorb imports from
struggling countries in the developing world, according to Dadush.

While most east Asian economies were stagnant in 1998, regional gross
domestic product should increase 5.5 percent this year and 6.2 percent in

"East Asian economies are in a much better position than they were a year
ago, with strong current account blances, much lower short-term external
liabilities and improved reserve positions," the World Bank found.

Latin America should see negative growth of 0.6 percent in 1999 before
returning to positive territory next year, 2.7 percent, and 3.5 percent in

Momentum in sub-Saharan Africa is predicted to reach 2.3 percent this year,
3.1 percent in 2000 and 3.4 percent in 2001.

For the Middle East and North Africa, the projected comparable growth rates
are two percent, 3.2 percent and 3.5 percent for the same years and 0.3,
2.5 and 3.3 percent in eastern Europe and central Asia.

The report also found that non-energy commodity prices would likely fall
10.5 percent in 1999 before staging a modest recovery in 2000.

Energy prices are likely to remain strong because of a decision by the
Organization of Petroleum Exporting Countries to limit output.

The bank in addition determined that prospects for private capital flows to
developing countries were worse than had been foreseen six months ago.

Average monthly flows from January to June this year were 12.1 billion
dollars, down from 16.2 billion in the same period of 1998.


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