Financial crisis leaves over 200 million on less than 2 dollars a day

Financial crisis leaves over 200 million on less than 2 dollars a day

As world leaders meet for the UN Millennium Development Goals Summit in New York, 20-22 September, a new report from the Institute for Public Policy Research (ippr) highlights that because of the financial crisis around 120 million more people may now be living on less than US$2 a day and 89 million more on less than US$1.25 a day.

The report shows that as a direct result of the crisis, output, exports, migrant remittances, capital inflows and aid have all been lower than expected over the last three years.

African countries will see only US$11 billion of the US$25 billion in increased aid promised for 2010 at the Gleneagles G8 and Millennium +5 meetings in 2005.

As governments struggle to live up to their MDG commitments, the Robin Hood Tax campaign is calling for banks to step into the breach they created. Taxes on financial transactions – which have become known as ‘Robin Hood’ taxes – could raise hundreds of billions a year from the financial sector and put us back on course for achieving the MDGs.

David Hillman, spokesperson of the Robin Hood Tax campaign, said: “The behaviour of the financial sector has jeopardised our chances of achieving the MDGs. Whilst banks return to record-breaking profit, for years to come, millions of people around the world will be feeling the negative effects of the financial crisis they did nothing to cause. Banks must face up to the problems they caused and pay their fair share.”

Tony Dolphin, Senior Economist at ippr, said: “The global financial crisis has had a devastating effect on emerging and developing economies. We estimate that their output over the last three years has been a cumulative US$2.5 trillion lower than it would otherwise have been.

“Although the worst of the crisis appears to be in the past, its effect on emerging and developing economies will continue well into the future.

“Lower employment rates and a lack of social safety nets mean that poverty is higher than it would otherwise have been and achieving the Millennium Development Goal of halving poverty by 2015 will be that much harder.”

The report also shows that the GDP of developing and emerging economies will be around US$1.3 trillion lower in 2010 than was expected in 2007 and the cumulative loss of output over the three years 2008 to 2010 will amount to US$2.6 trillion.

Exports will be about 20 per cent – over US$1 trillion – lower in 2010 than was being forecast before the crisis began. Remittances in 2009 and 2010 have been more than US$100 billion short of what might have been expected had there been no crisis.

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