While many developing economies are experiencing robust growth, global poverty and debt challenges remain significant concerns. A recent report from UNDP highlights the uneven growth patterns across 152 developing countries and projects persistent poverty and debt issues through 2026. The report underscores the complexities and challenges that lie ahead as the global economy continues to recover from recent crises.
UNEVEN GROWTH PATTERNS
- High Growth (4%+): 68 developing economies
- Moderate Growth (2-4%): 47 developing economies
- Low Growth (<2%): 37 developing economies
This multi-speed growth indicates a diverse economic landscape, with some nations advancing rapidly while others lag behind.
POVERTY PROJECTIONS
Extreme Poverty
Despite a downward trend since the pandemic, an estimated 7.7% of the global population could still be living in extreme poverty by 2024, slightly below the pre-pandemic level of 8%. This figure is projected to decrease slightly to 7.2% by 2026, says the report.
Additional Poverty Levels
- $2.15-3.65/day: 13.1% of the global population in 2024, totalling 20.8% living on less than $3.65 a day
- $3.65-6.85/day: 23.5% of the global population in 2024, totalling 44.3% living on less than $6.85 a day
By 2026, the shares of the global population living on less than $3.65 and $6.85 a day are projected to reach 18.9% and 42.5%, respectively.
DEBT CHALLENGES
Rising Debt Payments
High levels of debt and weak development financing are exacerbating the divergence in growth and poverty. In 49 countries, net interest payments as a share of revenue exceed 10%, up from 27 countries a decade ago. In 10 countries, this share is higher than 25%. Sub-Saharan Africa is the worst-affected region, accounting for 45% of countries with interest payments over 10% and 50% of countries with payments higher than 25%.
Debt Distress
Indicators of debt distress and default risk remain elevated:
- Sovereign Credit Ratings: 61% of developing economies with a sovereign credit rating (54 countries) are rated below ‘non-investment grade’.
- LIC-DSF Ratings: 51% of countries assessed under the LIC-DSF (34 countries) are rated either in or at high risk of debt distress.
RECENT CRISES AND RECOVERY
The onset of the COVID-19 pandemic, subsequent shocks such as the cost-of-living crisis, the war in Ukraine, and tightening financial conditions led to synchronized income and job losses across both advanced and developing countries. However, the global economy is now recovering, exhibiting significant growth at varying speeds.
DEVELOPING ECONOMIES’ DYNAMISM
Developing countries are showing relatively higher dynamism compared to their advanced counterparts. This higher growth potential highlights the importance of supporting these economies to ensure sustainable development and poverty reduction.
While there are positive signs of recovery and growth in many developing economies, the persistence of high debt levels and poverty underscores the need for comprehensive policy measures. Addressing these challenges will be crucial for achieving long-term economic stability and improving living standards globally. The report calls for strengthened international cooperation, improved debt management, and targeted development financing to support the most vulnerable nations.
