Poverty in East Asia and Southeast Asia: Upper-Middle Income Countries

Poverty in East Asia and Southeast Asia: Upper-Middle Income Countries

If you listen in on any conference today about world poverty, most likely, the discussion will be about Sub-Saharan Africa. As a matter of fact, forecasts indicate that by 2030, the region is expected to have nearly 9 out of 10 of extremely poor people globally which is up from around 2 out of 3 today. 30 years ago, Asia would have been the region on everyone’s mouth. The most populated area in the world had the largest amount of extreme poverty. However, the picture has changed completely and, by the end of the next decade, most countries in Asia are forecasted to have eradicated extreme poverty.

In this post, we will take a look at what we expect to happen during the next decade in East Asia and Southeast Asia, specifically China, Thailand, and Malaysia, all classified as upper-middle income countries by the World Bank.

Drastic poverty reduction over the last 30 years in China

Between 1990 and 2013, the number of extremely poor people living in East Asia fell by almost a billion. In 1990, the world had 1.8 billion people living on less than $1.90 a day (in 2011 PPP), of which 756 million were living in China. 65% of Chinese people were extremely poor. Today, less than 1% of Chinese people are living in extreme poverty. By 2030, only two countries in the region, Timor-Leste and Papua New Guinea, are expected to fail to achieve SDG 1.

According to the World Bank, East Asia accounts for nearly two-fifths of global growth. All across the region, economic development has pushed millions out of poverty. Countries such as China and Thailand are already upper-middle income countries. Malaysia is on the way to join the high-income club, and Indonesia and the Philippines are very close to upper-middle income status.

During the last decades, China’s sustained economic growth has been the main driver to reduce poverty in the region and in the world. Despite slower growth which averaged 10% during the first decade of the century and is now closer to 6%, China’s economy remains bullish. However, many economists suggest that this growth will be challenged by the middle-income trap when China gets closer to achieving high-income status.

With a population of over 1.4 billion, China is the most populated country in the world. The poverty reduction achieved to date is one of the largest contributors to the reduction in global poverty. As was previously mentioned, 65% Chinese had less than $1.90 a day in 1990. As of 2015, less than 1% of China’s population is living below the global poverty line. In addition, when we implement different poverty thresholds that are more appropriate to China’s upper-middle income status, the narrative remains relatively. While 15% of Chinese people (215 million) are currently living on less than $5.50 a day, this is expected to decrease to around 2% (30 million) by 2030.

Substantial poverty reduction in Thailand

Thailand has also achieved a rapid reduction in poverty. Four decades of sustained economic growth has raised Thailand from a low-income country to an upper-middle income one, a status which was achieved in 2011. But progress is not only economic—according to the World Bank, more children are getting more years of education and virtually everyone is covered by health insurance. Other forms of social security have also expanded. As a result of these achievements, Thailand has virtually eradicated all poverty below $3.20 per day. Currently, 7% of Thailand live on less than $5.50 per day. By 2028, less than 1% of the population is expected to be below this line.

Malaysia aims for high-income status by 2020

Malaysia, with less than 1% of the population living on less than $5.50 a day, is among the countries with the best poverty numbers worldwide. The effort of the government has “shifted towards addressing the well-being of the poorest 40 percent of the population“. Malaysia is one of the most open economies in the world and it aims to achieve high-income status in 2020.