Burgeoning middle classes hit hard by the pandemic

IN COUNTRIES as diverse as Kenya and Bangladesh, the coronavirus pandemic risks wiping out the burgeoning middle class in developing countries, experts have warned.

Covid-19 has dealt a heavy blow to the economies of low and middle income countries, with the World Bank estimating that it could push up to 71 million people back into extreme poverty this year.

However, academics are also warning that the absence of a social safety net, a fall in incomes and a drop in remittances will also puncture the growth of the burgeoning middle class in developing countries.

Over the past decade the middle class globally has been expanding very rapidly, according to Homi Kharas, a senior fellow at the Brookings Institution and co-founder of the World Data Lab.

“By my calculations, around 100 to 150million people per year were entering into the middle class,” he said, defining this group as those earning between $11 and $20 a day.

He added: “What appeared to be an inevitable and almost irresistible growth of the middle class seems to have been arrested and is declining for the first time in a very long time.”

Boshir Ahmed used to be a restaurant manager in Dhaka, the capital of Bangladesh, but now works as a rickshaw puller after losing his job at the beginning of lockdown.

“I still have to maintain my standard of living,” he says, explaining why he pedals his rickshaw for as long as possible each day. “My daughter still has to go to school and buy books.”

“She doesn’t know what I do for a living

‘By my calculations, around 100 to 150 million people per year were entering into the middle class’

now,” he admitted. “That’s why I leave the house everyday wearing my old work clothes.”

The loss of the tourist industry has also been keenly felt in many countries as tourism has pulled huge numbers out of poverty in the last few decades.

A growing middle class signals development, said William Hynes of the Organisation for Economic Co-operation and Development. In turn, middle classes drive economic growth.

“These are the people doing all the innovation, which, above anything, propels growth,” said Mr Kharas.