COVID-19 Leaves a Legacy of Rising Poverty and Widening Inequality

The global economy is beginning to bounce back from the economic ravages of the coronavirus pandemic, with growth of 5.6 percent expected for 2021. But this recovery is not being experienced equally. Poorer countries are contending with a deeper, longer-lasting crisis that has increased global poverty and is reversing recent trends of shrinking inequality. 

The result is that the impact of the COVID-19 pandemic is largest for the world’s poorest. In 2021, the average incomes of people in the bottom 40 percent of the global income distribution are 6.7 percent lower than pre-pandemic projections, while those of people in the top 40 percent are down 2.8 percent. The reason for this large difference: The poorest 40 percent have not started to recover their income losses, while the top 40 percent has recovered more than 45 percent of their initial income losses. Between 2019 and 2021, the average income of the bottom 40 percent fell by 2.2 percent, while the average income of the top 40 percent fell by 0.5 percent.