Millions pushed into poverty by the pandemic, soaring prices and recession

The World Bank’s Global Poverty Growth Report released earlier this week presents a graphic picture of the devastating impact of the COVID-19 pandemic on hundreds of millions of people in the world’s poorest countries. world, currently exacerbated by rising inflation and the global economy shifting into recession.

According to the report, the pandemic has dealt the biggest blow to poverty reduction in decades. The number of people pushed into “extreme poverty”, defined as receiving less than $1.90 a day, rose by 70 million to a total of 700 million, or 9.3% of the world’s population in 2020.

Water is distributed at a camp for displaced people on the outskirts of Dollow, Somalia, Wednesday, September 21, 2022. Somalia is in the midst of the worst drought in memory. A rare starvation declaration could be made within weeks. Climate change and fallout from the war in Ukraine are partly to blame. (AP Photo/Jerome Delay)

Under conditions of rising inflation, exacerbated by the US-NATO war on Russia in Ukraine and the downward movement of developing market currencies, produced by interest rate hikes the US Federal Reserve, the situation shows no signs of improving.

By the end of this year, as many as 685 million people could still be living in extreme poverty, making 2022 the second-worst year for poverty reduction in two decades after 2020.

The pandemic, as in so many other areas of economic and social life, was a trigger that accelerated processes already underway.

As the report noted, in the five years before it, poverty reduction had slowed and by 2020, “the world had moved significantly away from the global goal of ending extreme poverty by 2030”. According to current estimates, 7% of the world’s population, or 574 million people, will still be in extreme poverty by the end of the decade.

Even before the pandemic hit, almost half of the world’s population (47%) lived in poverty, that is, they received less than $6.85 a day.

With the estimated 20 million people dead due to the pandemic and the millions who continue to be infected, alongside millions more suffering the debilitating effects of Long COVID, increasing poverty is a new expression. of the scale of the social crime committed by capitalist governments around the world in their refusal to take the necessary public health measures to eliminate the virus from the human population.

It was not because it was impossible to do so – experience in China shows that it is quite feasible – but because of the negative impact it would have on stock markets, inflated to levels extraordinary by the infusion of trillions of dollars from the Fed and other central banks.

Now the finance capital agencies are committing new crimes. In an attempt to crush the movement of workers and the oppressed masses around the world as they face the highest inflation in four decades, central banks are raising interest rates in order to cause a recession.

The impact is already being felt by the world’s poorest people. The currencies of less developed countries have fallen dramatically, leading to escalating food and energy prices in the local currency.

The experience of Ghana is an example of this process. Over the past year, the price of oil in dollars has increased by 12%. But over the same period, the currency, the cedi, has fallen 40% against the US dollar. This means that a barrel of oil that cost 475 cedi a year ago now costs more than 900 cedi, almost double.

This experience is repeated country after country in the areas of food, energy, medical supplies and other vital imports.

At the same time, a growing number of countries are on the verge of defaulting on the debts they owe to government agencies and international finance capital. The debt of at least 10 countries has already been listed as being under extreme stress and many more will follow.

The “restructuring” programs dictated by the International Monetary Fund mean that Sri Lanka’s once-failing experience, unleashing a full-scale attack on the working class to pay off the vultures of international finance capital, continues around the world.

The World Bank calls for a series of reforms aimed at helping the poor, knowing that governments intend to do no such thing.

In fact, interest rate hikes instituted by the US Fed are pushing the world into recession, as the World Bank has already acknowledged with the World Trade Organization, the United Nations and a plethora of economists.

At its biannual meeting in Washington next week, the IMF will revise its global growth forecast downwards again, for the fourth time, as IMF Managing Director Kristalina Georgieva said in a speech yesterday. .

The IMF estimates that countries representing around a third of the global economy will experience at least two consecutive quarters of contraction this year or next and even when growth is positive, “it will look like a recession due to falling real incomes and rising prices.”

The total global production loss by 2026 is expected to be around $4 trillion. “This is the size of the German economy – a massive setback for the global economy,” she said, adding that “the situation is more likely to get worse.”

The head of the IMF did not want it, but her remarks were an indictment of the policies carried out by the supposed guardians of the stability of the world capitalist economy, especially the policy carried out on the COVID.

After 6.1% growth in 2021, she said, “most economists, including at the IMF, thought the recovery would continue and inflation would decline rapidly, largely because we expected vaccines to help tame supply disruptions and allow production to rebound. But that’s not what happened. »

Multiple shocks, including the war in Ukraine, “have completely changed the economic picture” and “far from being transitory, inflation has become entrenched”.

But as COVID policies have produced disaster, new disasters are being created.

Endorsing the interest rate hikes, Georgieva said “failure to tighten enough” would lead to “unanchoring and entrenchment” of inflation, code words in ruling circles and their economic agencies for a situation in which the working class strives to defend its standard of living through strikes and social struggles.

Repressing this movement is the number one priority of the financial elites even though, as she acknowledged, it could “push many economies into a prolonged recession”.

The World Bank report and the new devastation now unfolding must be an opportunity for the working class to soberly take stock of the situation it immediately faces and the nature of the struggles that are already developing.

Developments in the United States, the center of world imperialism, are particularly significant. After decades of repression of the class struggle, hundreds of thousands of workers, with millions more behind them, are entering the fray and are increasingly receptive to a socialist program.

Two opposing programs are on a collision course. The political economy of the capitalist ruling class is based on the pursuit of profit, regardless of the cost in human lives and economic devastation.

The political economy of the working class is based on utilizing the vast economic resources its labor has created for the advancement of human welfare. There is no middle ground or reformist path here. The material interests of the two main classes of capitalist society are irreconcilable.

The vital interests of the working class, the mass of the peoples of the world, can only be realized through a unified international political struggle against all agencies of capital, above all the trade union bureaucracies, for the seizure of power in order to carry out the transformation socialist world economy.

The precondition for its realization, as world capitalism plunges from one disaster after another, is the building of the world party of socialist revolution, the International Committee of the Fourth International, to provide the necessary leadership for the struggles that break out now.

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