World Bank updates poverty threshold: how it will affect millions of people
10 June 16:50
In June 2025, the World Bank announced a significant update of the global poverty threshold, rethinking the parameters that determine its level around the world. This happened after the publication of new purchasing power parities, "Komersant Ukrainian" reports with reference to the official website of the World Bank.
The new poverty threshold set by the World Bank is now $3 per day. This figure is an important benchmark that aims to provide a more accurate picture of the living conditions faced by millions of people around the world.
This adjustment, which has sparked widespread debate among economists, policymakers and activists, reflects the changing economic landscape and the urgent need for a more nuanced understanding of poverty in the modern world.
Why the World Bank has “raised the bar”
First of all, the revision reflects the rising prices of basic goods and services, especially in low-income countries.
The $3 threshold was not introduced out of a desire to make life harder for the poor. It is due to the rising cost of basic consumer baskets and improved measurements in developing countries,” says one of the World Bank’s analysts.
“In addition, updated national poverty lines collected by 163 countries have made it possible to more accurately determine the median value for each income group.
Understanding the new poverty line
David Malpass, the World Bank’s former president, noted the following:
This updated threshold is not just a number, it is a reflection of our commitment to understanding and addressing the realities of poverty in the 21st century.
The revision of the poverty line is based on comprehensive research and ongoing dialogue with experts from a variety of fields. It recognizes that traditional methods of measuring poverty often fail to take into account the complexities of the daily lives of those living on the edge of survival. By updating the threshold, the World Bank aims to improve the effectiveness of poverty reduction strategies and ensure that financial resources are targeted where they are needed most.
World statistics: the number of poor is growing
According to new data, in 2022, the catastrophic number of people living in “extreme poverty” increased from 713 million to 838 million. This means that 10.5% of the world’s population lives on less than $3 a day, compared to 9% according to the previous standard.
Regional differences are particularly revealing: in Sub-Saharan Africa (the name of the part of the African continent that, according to the UN definition, consists of all African countries and territories that are wholly or partially located south of the Sahara Desert – ed.), the share of the poor increased from 37% to 45.5%, and the only region where the number of poor people decreased was South Asia (from 9.7% to 7.3%).
Implications for global poverty
The implications of the updated poverty threshold are significant. With an estimated 700 million people living on less than $2 a day, the updated figure serves as a wake-up call to governments and organizations around the world. It underscores the urgent need for targeted measures that go beyond mere economic growth to address the root causes of poverty.
United Nations Under-Secretary-General Amina Mohammed said:
“We must recognize that poverty is not just about income; it encompasses a range of deprivations, including access to education, health care and clean water. The updated poverty line is a step towards a more holistic approach to addressing these issues.
A call for integrated strategies
The World Bank’s update is timely, given the ongoing impacts of climate change, economic instability, and the COVID-19 pandemic, which disproportionately affect the poorest. As countries strive to recover and rebuild, it is imperative that poverty reduction strategies evolve to reflect these new realities.
Policymakers are urged to develop comprehensive strategies that aim not only to raise incomes but also to expand access to basic services. This approach requires cooperation between governments, non-governmental organizations, and the private sector to create sustainable solutions.
Why the World Bank tracks global poverty
Since 1990, the World Bank has been estimating the number of people living in extreme poverty using a global standard based on minimum needs (food, shelter, and clothing). This data forms the basis for global development goals, such as the Sustainable Development Goals and the former Millennium Development Goals.
However, this indicator alone is not enough to fully reflect the poverty situation in the world. That is why the World Bank complements it with other indicators: poverty lines for low- and middle-income countries, a social poverty indicator (which changes with the level of income in a country), and a multidimensional index that takes into account not only money but also other aspects of life related to poverty.
These tools allow us to better monitor global trends and compare countries with each other. However, it is important to remember that to analyze the situation within a particular country, the national poverty rate is more accurate, taking into account local realities. It is on this level that government policies and programs to support the most vulnerable groups should be based.
Why change the international poverty line?
The international poverty line is periodically updated to reflect changes in world prices. The upward revision of the international poverty line also reflects better data on the cost of basic food, clothing, and shelter in low-income countries. Although the data has been updated, the methods for determining the international poverty line have not changed. The international poverty line was last updated in 2022, when price levels were updated from the 2011 PPP to the 2017 PPP.
Despite the new value, the international poverty line is still measured in the same way since it was first used in 1990; it identifies people living in absolute monetary poverty by the standards of the world’s poorest countries.
Why national poverty lines were revised
National poverty lines reflect countries’ own definitions of the amount of resources a person needs to avoid falling into the poverty trap. These poverty lines are regularly revised to reflect new survey data and country-level prices. With this update, it is particularly important to revise upward the national poverty lines that underlie the international poverty line.
As low-income countries have introduced improved survey methodologies to measure household welfare, they have also constructed new national poverty lines, typically based on a basic needs approach. This means calculating the value of a food basket that reflects the actual food habits of the population, as well as the estimated non-food component of household consumption. As improvements in survey methodology increase measured consumption, the estimated national poverty line also increases. Thus, the national poverty lines are designed specifically for the survey data collected.
How many people in Ukraine live below the poverty line
According to data for 2023-2024, the poverty rate in Ukraine has increased significantly.
In 2022, the proportion of the population living below the poverty line (according to the international threshold of $2.15 per day) increased from 5.5% in 2021 to 24.1%, adding about 7.1 million people to the number of poor people.
According to the national methodology (actual subsistence minimum, ASM), in 2023, the poverty rate was approximately 29% of the population, which corresponds to about 9 million people, an increase of 1.8 million compared to 2020.
The economic consequences of the war – massive job losses, falling incomes, and inflation – have significantly exacerbated poverty. Loss of labor income was the main reason for the impoverishment of the population, as more than 20% of those employed lost their jobs by 2022.
At the same time, state aid, such as pensions and social benefits, especially for internally displaced persons, has reduced the negative impact of the war. According to Arup Banerjee, the World Bank’s Regional Director for Eastern Europe, “If international partners had not supported social payments, another 3 million people would have fallen below the poverty line.”
Social support through government payments remains critical despite the difficult situation and is slowing the decline in living standards.
Currency inflation, job losses, destroyed infrastructure, and deep regional disparities are exacerbating the situation of the most vulnerable groups.
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