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621 Million Asians Lived in Extreme Poverty in 2003; 300 Million Fewer Than in 1990, Says ADB

MANILA, PHILIPPINES (30 August 2005) - Some 621 million people in Asia and the Pacific, or 19.3% of developing Asia's population, lived on less than $1 a day in 2003, according to new estimates from the Asian Development Bank (ADB). A 2002 estimate of $1-a-day poverty was 688 million.

ADB estimates that 1.85 billion people, or 57.4% of the region's population, lived on less than $2 a day in 2003, the most recent year for which sufficient data is available to formulate estimates. The new estimates were announced today in ADB's Key Indicators 2005, an annual statistical compendium of economic, financial, and social indicators.

The estimates are based on calculations using local currencies converted on the basis of Purchasing Power Parity exchange rates.

"Asian governments are making significant progress in the fight against poverty," says Ifzal Ali, ADB's Chief Economist. "But the latest data clearly indicate that reducing poverty remains a central challenge facing the region, and certainly its most important development challenge."

In 2003, there were 300 million fewer people living on less than $1 a day in Asia and the Pacific than in 1990, according to Key Indicators 2005.

The report notes that despite the impressive region-wide reduction in poverty, large disparities remain among countries. About 93% of the 621 million people living on less than $1 a day in 2003 lived in India (327 million), the People's Republic of China (PRC) (173 million), and other South Asian countries (77 million).

Much of the region's overall success in recent years is the result of a dramatic reduction in poverty in the PRC. The country was responsible for almost 68% of the overall decline in the region, with 204 million fewer people in extreme poverty than in 1990. The number of people in extreme poverty in Southeast Asia fell by 54 million people over the period.

The performance of South Asia was weaker. Although the percentage of South Asia's population living under extreme poverty declined to 29% in 2003 from 41.3% in 1990, relatively rapid population growth in South Asia meant the number of extremely poor fell by only about 45 million.

Across Asia and the Pacific an estimated 67 million fewer people were living in extreme poverty in 2003 than in 2002. However, caution should be exercised when comparing estimates from year to year.

Poverty estimates can be influenced by updates to underlying data and improved availability of information from household surveys-which enable direct estimation of the number of poor as opposed to using extrapolation methods. These technical factors may influence poverty estimates even if actual standards of living are unchanged.

Changes in economic performance also influence poverty estimates. This is highlighted by the experience of India, the country with the largest number of poor in the world. In 2002, India suffered one of its worst droughts in 20 years. The agriculture sector, on which many poor depend for their incomes, was badly hit and GDP growth slowed to 2.2%. In 2003, both the agriculture sector and the broader economy rebounded.

The impact on poverty figures is striking. Factoring in economic performance and updated data the poverty rate for 2003 is estimated at 30.7%, down from 34% in 2002.

"This large decline in the incidence of poverty is heartening. But India's experience also clearly illustrates that tens of millions of people are living on the edge of poverty and remain vulnerable to the vagaries of weather and other factors over which they have little or no control," says Mr. Ali.

Key Indicators 2005 also presents poverty projections [ PDF ] for developing Asia based on different scenarios of economic growth and distribution. The most favorable scenario assumes that in the period up to 2015 most countries will maintain per capita GDP growth rates seen during 2000-2004 and face the most favorable distribution of income experienced in the past. In this case, the number of people living in extreme poverty would decline to 108 million in 2015, down from 621 million in 2003. The vast majority of the poor-some 102 million-would be concentrated in South Asia in 2015.

In the worst scenario considered, per capita growth is one percentage point lower than in the best scenario and the least favorable distribution experienced in the past is assumed. Under this scenario, 347 million people would still be living in extreme poverty in developing Asia in 2015. Again the concentration would be in South Asia with 274 million, followed by PRC with 46 million, and Southeast Asia with 23 million.

"Rapid poverty reduction requires not only high rates of economic growth, but also that the benefits of this growth be distributed more equitably," says Mr. Ali.

The Asian Development Bank is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members, with 45 from the region.

Note: Poverty by sub-region may not sum exactly to total poverty in the region due to rounding.

Read the full report.

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