The global "middle class" (or perhaps better described as the middle-income) shrank last year because of the Covid-19 pandemic, with almost two-thirds of households in developing economies reporting they suffered a loss in income, according to two new estimates based on World Bank data.
Researchers at the non-partisan Pew Research Center found that the ranks of the global "middle class" – those earning $10-$50 per day – fell by 90 million people to almost 2.5 billion last year to swell the ranks of the poor, (those living on less than $2 a day), by 131 million.
The Pew data on the middle class actually understates the impact because an estimated 62 million high-income people, or those earning $50 or more per day, dropped into the middle tier as a result of the pandemic. That meant the number of people who went into the crisis as members of the global "middle class" and fell out actually topped 150 million last year. South Asia accounted for more than a third of the decrease in the ranks of the middle class seen last year
“In modern history it is hard to come up with examples where you saw such a sharp downturn in global economic growth,” Rakesh Kochhar, the study’s author said.
The World Bank expects the ranks of the world’s poor to continue to grow this year. Its estimate show as many as 124 million people fell below its $1.90 line for extreme poverty in 2020. That number of new poor is projected to continue growing this year to as many as 163 million people.