Global inequality is rising again

COVID-19 was never going to be good for the poor. At first, however, the disease was not associated with rising inequality. Richer economies tended to suffer larger declines in gross domestic product (GDP) per person than many poor ones in 2020 — and within those countries, hefty stimulus packages protected the poorest from penury.

As the pandemic wore on, though, its effects on global inequality shifted. Richer countries enjoyed better access to vaccines than poorer ones, and were more able to sustain spending on programmes to support incomes and bolster recoveries. The net effect of the pandemic has been to raise inequality between countries, back to the levels of the early 2010s on some measures.

Thus, the long decline in global inequality that began around 1990 has come to an end — and gaps between rich and poor now look likely to widen, as poor countries take longer to recover from Covid. Yet the causes of inequality’s resurgence are not universally bleak. Paradoxically, part of the explanation lies in increasing incomes among the formerly impoverished.