Implications of the global growth slowdown for rural poverty

Over the past 25 years, higher growth in developing countries has contributed to a dramatic fall in global poverty, although poverty rates in rural areas remain higher than in urban areas. Unfortunately, projected growth rates have fallen in recent years; this article examines the impact of this slowdown on the poor, particularly the rural poor. It first uses a global model to assess the impacts of lower productivity on key price and income variables. It then uses microsimulation models for almost 300,000 households to assess the impacts on their real incomes. Although poverty rates overall are projected to fall substantially, the poorest countries see the greatest slowdown in poverty reduction, with over 5% of their population projected to remain below the poverty line. In addition, poverty rates will remain alarmingly high in many countries. Overall, 38 million fewer people will leave extreme poverty compared to earlier projections. Farm households are at particular risk in middle-income countries, with over 1.5% more of the farming population remaining trapped in poverty than previously estimated. By 2030, average extreme poverty in rural areas is projected at about 7.5%, rather than 7.1% under the earlier growth projections. Clearly, a strong focus on policies for poverty reduction will be vital for eliminating poverty by 2030.