The Covid-19 pandemic is widening the gap between rich and poor countries, a trend that threatens to reverse years of economic progress and set back efforts to alleviate global poverty.
The pandemic pushed the global economy into recession in 2020, but richer nations have bounced back faster than poorer ones, thanks to widespread access to vaccines and lavish programs to support businesses and workers through lockdown.
The U.S. economy regained its pre-pandemic size in the second quarter of 2021, and most other big economies are expected to follow suit in 2022, if they haven’t already.
The economies of many developing nations, however, could take years to regain their 2019 size. The International Monetary Fund has labeled the widening rift “the great divergence.”
GDP, annual change in economies by classification, 2000–2026
PRE-PANDEMIC WIDENING
PRE-PANDEMIC NARROWING
GLOBAL
PANDEMIC
Widening between economies as emerging growth rates increase, catching up with advanced economies
Narrowing between economies as emerging growth rates slow against advanced economies
Sharp narrowing as the pandemic hits followed by slow projected growth
PRE-PANDEMIC WIDENING
PRE-PANDEMIC NARROWING
GLOBAL
PANDEMIC
Widening between economies as emerging growth rates increase, catching up with advanced economies
Narrowing between economies as emerging growth rates slow against advanced economies
Sharp narrowing as the pandemic hits followed by slow projected growth
PRE-PANDEMIC WIDENING
PRE-PANDEMIC NARROWING
GLOBAL
PANDEMIC
Widening between economies as emerging growth rates increase, catching up with advanced economies
Narrowing between economies as emerging growth rates slow against advanced economies
Sharp narrowing as the pandemic hits followed by slow projected growth
PRE-PANDEMIC
WIDENING
PRE-PANDEMIC
NARROWING
GLOBAL
PANDEMIC
Widening between economies as emerging growth rates increase, catching up with advanced economies
Narrowing between economies as emerging growth rates slow against advanced economies
Sharp narrowing as the pandemic hits followed by slow projected growth
PRE-PANDEMIC
WIDENING
PRE-PANDEMIC
NARROWING
GLOBAL
PANDEMIC
Widening between economies as emerging growth rates increase catching up with advanced economies
Narrowing between economies as emerging growth rates slow against advanced economies
Sharp narrowing as the pandemic hits followed by slow projected growth
The Omicron variant of Covid-19, first spotted in November in South Africa, represents a new challenge. The variant has spread rapidly world-wide, displacing older strains such as Delta due to its higher transmissibility and ability to partially evade the immunity conferred by vaccination or prior infection.
A growing body of evidence suggests Omicron causes less severe disease than its predecessors. Yet the variant still has the potential to cause waves of illness that richer countries, with access to vaccines and sophisticated healthcare systems, are better equipped to handle than poorer ones.
Migrant workers wait to board buses in Mumbai, India, in May 2020, as they journey to their home states. The pandemic triggered lockdowns in both developed and developing economies but richer nations have emerged stronger thanks to lavish government support for idled businesses and workers.
Rajanish Kakade/Associated Press
A customer leaves a bank where people receive international money wires in Acatlán de Osorio, Mexico, in June 2020. Remittances—a key source of income for developing countries—slowed to a trickle during the pandemic as workers overseas lost their jobs.
Fernando Llano/Associated Press
People wait in line in November to withdraw money from a welfare program at a public bank in Rio de Janeiro. Economists say the pandemic set back progress by years in alleviating global poverty, leaving many millions more in extreme hardship last year compared with pre-pandemic projections.
Silvia Izquierdo/Associated Press
Elderly people waited in June to receive their Covid-19 vaccine, at a clinic at Orange Farm, near Johannesburg. Vaccination rates in poor countries trail those in rich ones, adding to the burden of disease from Covid-19 and hampering economic recovery.
Denis Farrell/Associated Press
In the two decades before the pandemic, developing economies had been closing the gap with their advanced peers in terms of wealth, health and education. Developing economies’ growth rates in the first decade of the 21st century outpaced those of richer countries, though the gap had narrowed just before the pandemic.
Emerging economies
In 2010, emerging economies were growing much faster than advanced economies, boosting hopes of reducing global poverty.
By 2019, growth in emerging economies had slowed to rates closer to those of advanced economies, tempering the progress of the previous decade.
In 2020, economic growth crumbled worldwide as pandemic lockdowns put whole economies in the deep freeze until the virus was brought under control. China was one of a small number of countries that maintained growth despite the pandemic.
In 2021, growth recovered in richer and poorer countries as governments reopened their economies. But the double-digit growth many developing countries experienced in previous decades has been elusive.
One key divide between rich and poor nations during the pandemic has been the disparity in vaccination rates, which has significantly favored richer countries.
Death rates in 2020 from Covid-19 were high in advanced economies as they were hit early in the pandemic.
Last year, death rates rose in emerging economies as new variants fueled big outbreaks, while many advanced economies’ death rates fell thanks to widening vaccination coverage.
Note: Data for GDP per capita and population are for 2020 throughout. Groupings are based on World Bank classifications. Excludes several countries that don’t have available data for some indicators. For display purposes, three outliers in GDP growth were excluded: Guyana (43.5% in 2020), Libya (–59.7% in 2020 and 123.2% in 2021) and Venezuela (–35% in 2019 and –30% in 2020). Economic data updated as of October 2021. Covid-19 data as of Dec. 31.
Sources: International Monetary Fund (GDP, GDP per capita); World Bank (population); Our World in Data (Covid-19 vaccinations, deaths)
One way the pandemic has set back developing economies is by its effect on remittances from workers overseas, an important source of income for households and the wider economy. Remittances to developing countries fell by more than a quarter on average in 2020, as economies locked down around the world and workers lost their jobs.
Annual change in remittances
for low-income economies
2019
(pre-pandemic)
GDP per capita, 2020
ANNUAL CHANGE IN REMITTANCES
Guinea-
Bissau
Democratic
Republic of
Congo
Note: Personal remittances received by country;
excludes several countries that don’t have available data.
Sources: World Bank (remittances); International Monetary Fund (GDP per capita)
Annual change in remittances
for low-income economies
2019
(pre-pandemic)
GDP per capita, 2020
ANNUAL CHANGE IN REMITTANCES
Guinea-
Bissau
Democratic
Republic of
Congo
Note: Personal remittances received by country;
excludes several countries that don’t have available data.
Sources: World Bank (remittances); International Monetary Fund (GDP per capita)
Annual change in remittances
for low-income economies
2019
(pre-pandemic)
GDP per capita, 2020
ANNUAL CHANGE IN REMITTANCES
Guinea-
Bissau
Democratic
Republic of
Congo
Note: Personal remittances received by country;
excludes several countries that don’t have available data.
Sources: World Bank (remittances); International Monetary Fund (GDP per capita)
Annual change in remittances
for low-income economies
2019
(pre-pandemic)
GDP per capita, 2020
ANNUAL CHANGE IN REMITTANCES
Democratic
Republic of
Congo
Note: Personal remittances received by country; excludes several countries that don’t have available data.
Sources: World Bank (remittances);
International Monetary Fund (GDP per capita)
Annual change in remittances for low-income economies
2019
(pre-pandemic)
GDP per capita, 2020
ANNUAL CHANGE IN REMITTANCES
Democratic
Republic of
Congo
The pandemic also pushed people out of work. In advanced economies, government support for workers and speedy recoveries have led to a recovery in employment. Demand for labor in some economic sectors is so high that employers can’t find staff. In developing economies, though, many governments lacked the fiscal firepower to offer equally generous support, and slower recoveries mean employment will likely take longer to recover.
GDP per capita, 2020
Percentage of population 15 and older who are employed, by economic classification
Emerging economies
Advanced economies
2019
(pre-pandemic)
Percentage of population employed
GDP per capita, 2020
Percentage of population 15 and older who are employed, by economic classification
Emerging economies
Advanced economies
2019
(pre-pandemic)
Percentage of population employed
GDP per capita, 2020
Percentage of population 15 and older who are employed, by economic classification
Emerging economies
Advanced economies
2019
(pre-pandemic)
Percentage of population employed
Percentage of population 15 and older who are employed, by economic classification
GDP per capita, 2020
Advanced economies
Emerging economies
2019
(pre-pandemic)
Percentage of population employed
Percentage of population 15 and older who are employed, by economic classification
GDP per capita, 2020
Emerging economies
Advanced economies
2019
(pre-pandemic)
Percentage of population employed
For developing countries, the economic hits add up to a significant projected increase in the number of people living in extreme poverty, defined by the World Bank as less than $1.90 a day, compared with prepandemic expectations.
Projected number of people in extreme poverty, by country income group, 2021
= 1 million people
BEFORE PANDEMIC
INCREASE DURING
PANDEMIC
TOTAL
MILLIONS
High-income countries
Upper-middle income countries
Lower-middle income countries
Low-income countries
Projected number of people in extreme poverty, by country income group, 2021
BEFORE PANDEMIC
= 1 million people
INCREASE DURING
PANDEMIC
TOTAL
MILLIONS
High-income countries
Upper-middle income countries
Lower-middle income countries
Low-income countries
Projected number of people in extreme poverty, by country income group, 2021
BEFORE PANDEMIC
= 1 million people
INCREASE DURING
PANDEMIC
TOTAL
MILLIONS
High-income countries
Upper-middle income countries
Lower-middle income countries
Low-income countries
Projected number of people in extreme poverty, by country income group, 2021
BEFORE
PANDEMIC
= 1 million people
INCREASE
DURING
PANDEMIC
TOTAL
MILLIONS
High-income countries
Upper-middle income countries
Lower-middle income countries
Low-income countries
Projected number of people in extreme poverty, by country income group, 2021
= 1 million people
BEFORE
PANDEMIC
INCREASE
DURING
PANDEMIC
TOTAL
MILLIONS
High-income countries
Upper-middle income countries
Lower-middle income countries
Low income countries
Economists say some of the pandemic’s potential longer-term effects include a squeeze on poorer countries’ room for growth. In education, for instance, it isn’t known if girls will return to the classroom as quickly as boys when Covid-19 recedes, undermining progress on narrowing attainment gaps between the sexes in poorer countries.
Christoph Lakner, a senior economist at the World Bank, said that before the pandemic, progress on alleviating poverty world-wide was already slowing. Rapid growth in incomes in places such as India and China in previous decades drove a steep reduction in poverty that had started to peter out as the world’s poorest became increasingly concentrated in places beset by conflict. The virus has intensified that slowdown, he said.
“Covid is a big setback,” he said.
—Peter Santilli contributed to this article.
Write to Jason Douglas at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
