The forecast used a new international poverty line of $1.9 a day, an upgrade from the previous line of $1.25 a day, which was set in 2005, as per sources.
The reason for the World Bank to adjust the poverty line is to correct for the fact that prices had risen since 2005 and $1.25 now would no longer buy what it bought in 2005, said the World Bank chief economist Kaushik Basu in a blog post.
The method used to upgrade the poverty line was to take the average inflation in the poorest nations of the world and raise the nominal poverty line in order to hold it constant in real terms, according to Basu.
Using the new line, the World Bank projected that global poverty will fall from 902 million people or 12.8 percent of the global population in 2012 to 702 million people, or 9.6 percent of the global population this year.
The continued major reductions in poverty were due to strong growth rates in developing countries in recent years and investments in people’s education, health and social safety nets, said Jim Yong Kim, president of World Bank Group.
In order to further reduce poverty and boost shared prosperity, the World Bank president called on countries to boost broad-based growth that generates sufficient income-earning opportunities to invest in areas such as education, health and sanitation, and to protect the poor and vulnerable against sudden risks of unemployment, hunger, illness and other calamities.