Another 100m in poverty; 700,000 dead children in Africa: the latest World Bank predictions on the crisis
Chilling new numbers from the World Bank on the human impact of the global economic crisis. New estimates for 2009 suggest that lower economic growth rates will trap 46 million more people on less than $1.25 a day than was expected prior to the crisis. An extra 53 million will stay trapped on less than $2 a day. This is on top of the 130-155 million people pushed into poverty in 2008 because of soaring food and fuel prices. Preliminary estimates for 2009 to 2015 forecast that an average 200,000 to 400,000 more children a year, a total of 1.4 to 2.8 million, may die if the crisis persists. However even this awful figure may be too low – Shanta Devarajan, the Bank’s chief economist for Africa uses a different method to predict that due to the crisis in Africa alone an additional 700,000 children a year will die before their first birthday. These are all estimates based on previously observed elasticities etc, rather than actual current data, but until that comes in, they should be grabbing he headlines as we head for the G20’s ‘London Summit’ on 2 April.
The Bank has also put together a handy Venn diagram of which countries it considers most vulnerable – the place you don’t want to be is in the overlapping area of high poverty/decelerating growth.
I’m currently in South Africa, identified by the Bank as precisely one of the ‘high exposure’ countries. According to local press reports 20,000 mining jobs have already been lost and Trevor Manual, the normally tight-fisted finance minister, has just announced the government is raising spending by 8% to boost demand even though tax revenues are predicted to fall along with growth. The result will be a rapidly increasing fiscal deficit of 3.8% of GDP. Local government, however, does not have the option to pursue such countercyclical policies as most municipalities can’t raise commercial loans.