Introduction
In 2025, the global landscape of poverty continues to evolve, reflecting complex interactions between economic growth, geopolitical tensions, climate change, and health crises. A key milestone in this evolution is the World Bank’s recent update of the international poverty line to $3.00 per person per day (2021 PPP), replacing the previous $2.15 benchmark. This change follows the release of new purchasing power parities (PPPs) by the International Comparison Program (ICP) in May 2024. The revision not only recalibrates poverty estimates but also reshapes our understanding of who and where the world’s poor are. This post explores the changes in poverty definitions, regional and global trends, underlying causes of poverty stagnation, and projections for the future.
Understanding the New Poverty Line
Purchasing power parity (PPP) is essential in translating national currencies into a comparable unit that accounts for cost-of-living differences across countries. The updated PPPs, derived from the ICP 2021 cycle, led to the World Bank setting the new international poverty line at $3.00 (in 2021 international dollars). The $2.15 poverty line, established in 2017 PPPs, had been the standard to identify extreme poverty worldwide. The increase to $3.00 reflects both inflation and updated national poverty lines in many countries.
This international poverty line is not arbitrary; it is based on the median of national poverty lines of the world’s poorest countries. It aims to represent the minimum daily amount needed to meet basic nutritional, clothing, and shelter needs.
Key Drivers of the Revision
Three primary factors explain the major revision to global poverty estimates:
- Adoption of 2021 PPPs: These new metrics offer a more current snapshot of relative price levels and purchasing power across countries.
- Update to the International Poverty Line: The change from $2.15 to $3.00 is driven by both new PPPs and evolving national benchmarks of poverty.
- Improved Household Survey Data: Especially from countries like India, where more recent and comprehensive data now influence the estimates more accurately.
Impact on Poverty Numbers
The revision led to an upward adjustment of global poverty numbers. In 2022, about 838 million people were living in extreme poverty using the $3.00 benchmark. This is 125 million more than the 713 million estimated earlier using the $2.15 line.
Regionally, the impacts were uneven:
- Sub-Saharan Africa: Witnessed the largest revision, with 111 million more people now considered extremely poor.
- South Asia: Surprisingly, the new data led to a reduction of 45 million in extreme poverty estimates, thanks in part to updated surveys from India.
- Other Regions: Also saw upward revisions, though smaller in scale.
Stalled Progress: A Lost Decade?
The post-2020 period has been marked by stagnation in poverty reduction. Several contributing factors include:
- COVID-19 Pandemic: Triggered massive disruptions in economies, healthcare, and education systems.
- Low Economic Growth: Particularly in low-income and fragile countries.
- High Inflation and Conflict: Reduced real incomes and increased vulnerability.
As a result, the world is on track to reduce the number of extremely poor people by only 69 million between 2024 and 2030—less than half the progress made between 2013 and 2019.
Current Poverty Levels (2024 Data)
- Extreme Poverty (<$2.15/day): 692 million people (8.5% of global population)
- Poverty at $3.65/day (lower-middle-income standard): 1.7 billion people (21.4%)
- Poverty at $6.85/day (upper-middle-income standard): 3.5 billion people (43.6%)
These levels illustrate the significant variation in poverty depending on the standard used. While only 8.5% live below the extreme line, nearly half the world lives on less than $6.85 a day.
Sub-Saharan Africa: The Epicenter of Extreme Poverty
Sub-Saharan Africa accounts for:
- 16% of the world population
- 67% of people in extreme poverty
When fragile and conflict-affected states are included, the share rises to three-quarters. Many of these countries are eligible for aid from the International Development Association (IDA).
Projections to 2030
Looking ahead:
- 622 million people (7.3%) are projected to live in extreme poverty by 2030.
- 3.4 billion people (40%) will likely live on less than $6.85/day.
This implies that unless growth becomes more inclusive and resilient, it will take decades to eliminate extreme poverty and over a century to lift everyone above the upper-middle-income poverty line.
Historical Context and Long-Term Trends
Since 1990:
- Extreme poverty rate fell from 38% to 8.5%
- Over 1 billion people escaped poverty, largely due to growth in China and India
However, since 2020, this progress has slowed considerably, and the 2020–30 period risks becoming a “lost decade.”
High Inequality and Climate Vulnerability
Inequality remains a concern:
- Economies with Gini coefficients above 40 declined from 61 to 49 in a decade.
- High-inequality regions include Latin America and Sub-Saharan Africa, home to 1.7 billion people.
In addition, climate change poses a severe threat:
- One in five people risk welfare losses due to extreme weather events.
- Greenhouse gas emissions in 2022 reached record levels, trapping nearly 50% more heat than in 1990.
A Broader Perspective: Poverty Beyond $2.15/day
The World Bank uses multiple thresholds:
- $2.15/day: Extreme poverty (2017 PPP)
- $3.65/day: Lower-middle-income standard
- $6.85/day: Upper-middle-income standard
- $24.35/day: High-income country standard
The $6.85 line is increasingly being emphasized to reflect changing global living standards and needs. The definition of basic needs now extends to include sanitation, internet, electricity, and education, in addition to food, clothing, and shelter.
Societal Poverty: A New Concept
The societal poverty line increases with a country’s average income, reflecting the idea that the cost of meeting basic needs rises as economies grow. It provides a more realistic picture of poverty in richer countries.
Monitoring this line reveals that:
- Progress in societal poverty has been slower than in absolute poverty.
- It shows a more even distribution of poverty across regions when used instead of the $2.15 line.
Policy Imperatives and Way Forward
To reverse the current stagnation in poverty reduction, the following measures are essential:
- Boost Inclusive Growth: Economic growth must benefit the poor more directly.
- Create Better Jobs: Raise labor incomes by improving job quality and availability.
- Invest in Human Capital: Focus on education, health, and skills.
- Build Resilience: Infrastructure, social protection, and climate adaptation are key.
- Address Inequality: Redistributive policies and fairer taxation systems.
Conclusion
Global poverty in 2025 presents a mixed picture. While long-term gains remain substantial compared to the early 1990s, recent progress has been minimal. The World Bank’s update to the poverty line from $2.15 to $3.00 reflects a more realistic view of what constitutes basic living standards today. However, with 3.5 billion people still living on less than $6.85 per day and hundreds of millions in extreme poverty, the task ahead remains formidable.
A combination of inclusive economic growth, climate resilience, improved data, and targeted policy action is critical. Without urgent intervention, the 2020s may indeed go down as a lost decade in the fight against global poverty.