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Historic Setback

Millions of people Tumble Out of the Global Middle Class in a historic setback.

For the first time since the 1990s, the global ­middle class shrank last year, according to a recent Pew Research Center estimate. About 150 million people—a number equal to the populations of the U.K. and Germany combined—tumbled down the socioeconomic ladder in 2020, with South Asia and sub-Saharan Africa seeing the biggest declines.

The divergences are stark. India will end 2021 with a gross domestic product that’s 5.2% smaller than it would have been otherwise, according to forecasts by Bloomberg Economics. Indonesia’s output will be 9.2% smaller than its pre-crisis trend foretold. The U.S.? Just 1.6% smaller.

As in other countries, India’s poorest have borne the largest share of the economic pain from the coronavirus crisis, Fernandes says. But the downturn has also wiped out scores of white-collar jobs such as engineers and teachers. About 21 million salaried workers lost their jobs between April and August of last year, according to the report.

The upshot is that India’s middle class shrank by 32 million people in 2020, accounting for 60% of the worldwide drop in the number of people earning $10-$20 a day, according to Pew Research Center estimates. The reversal looks like the largest India has seen since it began liberalizing its economy in 1991.

Pandemic-Related Decline


Pew Reports The Pandemic Stalls Growth in the Global Middle Class, Pushes Poverty Up Sharply

A new Pew Research Center analysis finds that the global middle class encompassed 54 million fewer people in 2020 than the number projected prior to the onset of the pandemic. Meanwhile, the number of poor is estimated to have been 131 million higher because of the recession.

As defined in this report (and in previous Pew Research Center analyses), people who are middle income live on $10.01-$20 a day, which translates to an annual income of about $14,600 to $29,200 for a family of four. This is modest by the standards of advanced economies. In fact, it straddles the official poverty line in the United States – about $23,000 for a family of four in 2020 (expressed in 2011 prices). By global standards, the poor live on $2 or less a day, or no more than $2,920 annually for a family of four.

The number of people in the global high-income tier (more than $50 daily) is estimated to have decreased by 62 million in 2020, erasing about half of the gain since 2011, with most of the change emanating from advanced economies. Meanwhile, the upper-middle income population ($20.01-$50 daily) fell by 36 million, while the low-income population ($2.01-$10 daily) is estimated to have increased by 21 million.