World Bank raises global poverty line to $3 per day amid rising living costs

The World Bank has raised its global poverty thresholds for the first time since 2022, setting the new international poverty line at $3 per person per day, a significant increase from the previous $2.15.

The updated benchmark reflects rising living costs and aims to better capture the basic needs of people in the world’s poorest countries.

The new threshold, released this month, is part of the Bank’s ongoing effort to more accurately track extreme poverty — the most severe deprivation of basic human needs. It also adjusts two additional poverty lines introduced in 2017 for countries with higher income levels. The lower-middle-income line has increased from $3.65 to $4.20, while the upper-middle-income line has risen from $6.85 to $8.30.

“While these updates improve accuracy, the international poverty line still represents an extremely low bar,” the Bank said in a statement, noting it is based on the cost of meeting minimum needs in low-income countries. “It should be used primarily for cross-country comparisons, not to guide domestic policies.”

The revisions follow the release of new Purchasing Power Parity (PPP) data from the International Comparison Program, which reflects global price shifts based on 2021 data. PPPs are crucial for adjusting income and consumption levels to account for different living costs across countries.

Since the introduction of the first international poverty line in 1990, then set at $1 per day, the World Bank has tracked global poverty trends to inform policy and assess progress. Over the last 35 years, the number of people living in extreme poverty has dropped by more than 1.5 billion, but progress has slowed sharply in the last decade.

Today, approximately 808 million people still live in extreme poverty. “At the current pace,” the Bank warned, “it could take decades to eradicate it.”

Why poverty eradication has slowed

The slowdown is attributed to overlapping global challenges: sluggish economic growth, high debt burdens, conflict and political instability, and increasingly severe climate-related disasters.

The Bank also highlighted shifting demographics and poverty concentrations. In 1990, nearly 60% of the global population lived in low-income countries. Today, that figure has fallen below 10%, with about three-quarters of the world’s population now residing in middle-income nations. While poverty has declined sharply in East Asia and South Asia, it remains concentrated in Sub-Saharan Africa, where gains have been limited.

To better understand gaps in global prosperity, the World Bank introduced the Prosperity Gap in 2024 — a new tool that monitors how far low- and middle-income countries are from achieving basic living standards common in high-income economies.

At the heart of all these efforts is data, particularly household surveys that capture income, spending, and living conditions. The Bank said recent improvements in survey quality, especially in low- and middle-income countries, have enhanced global poverty measurement.

Still, the Bank acknowledged data gaps persist. “We must continue to improve the accuracy, timeliness, and policy relevance of poverty data,” the statement said. “Strengthening national statistical capacity is vital to ensuring that poverty reduction remains a central policy priority.”

The Bank emphasized that poverty is not only a monetary issue. Non-income indicators, including education, health, sanitation, and electricity, are crucial for capturing the full scope of human well-being.

“As we work to end poverty and boost shared prosperity on a livable planet, reliable and timely data must remain our foundation,” the Bank said.