Nepal: Back on top of the world - almost

South Asia's moment has arrived. Over the last decade, poverty reduction in the region has gained considerable momentum, with the share of the population living on less than PPP $1.90 a day falling sharply from 444 million in 2010 (or 27.3% of the region's total population) to some 107 million (6% of the total population) today. By 2030, we forecast that this number could be as low as 10 million or just 0.5% of the total population. In other words, over the course of just twenty years the entire region -- on the whole -- will have "eradicated" poverty. That's unprecedented in history. 

Already in 2018 -- and in the words of global press outlets -- India has passed the title of "world poverty capital" to Nigeria  (we reported here).  But the story of South Asia's rise won't stop with India. The rest of the region is also performing astonishingly well, and if conditions remain unchanged, by 2030, India's share of extremely poor people will have dropped by 30 percentage points from it's 2010 levels, Bangladesh's share will have fallen by 28 percentage points, and Nepal's by some 16 percentage points.

Wait, Nepal? This claim runs counter to the government of Nepal's on-going insistence to remain being considered a Least Developed Country (LDC) by the United Nations. Three years ago, in 2015, Nepal was found to have met two out of three LDC Graduation Criteria (Economic Vulnerability Index and Human Assets Index), but fell short by some 50% for the third, with a GNI per capita level of more than $1,242The countries goal, is to "graduate meaningfully, smoothly, sustainably and irreversibly." And since its Ninth Five-Year plan, Nepal identified poverty alleviation as the government's single most important objective, and is currently working on enshrining this aim in the federal constitution.

Despite these ambitions and positive trajectory, however, the country still grapples with the fairly classic LDC characteristic of a strong rural-urban divide. The rural regions tend to significantly lag behind in access to essential services such as health, education and safe drinking water. Between 3/4 and 2/3 of active workforce is engaged in low productive agriculture, thus spurring strong migration to urban areas where mostly poor people find jobs both in tourism and in the expanding construction sector due to reconstruction activities of infrastructure and buildings which were destroyed by two earthquakes in spring 2015 and heavy flooding in 2017.

All this sums up to a current poverty escape rate for Nepal of 33.6 people per hour, which is, according to our models, twice as much as necessary to achieve SDG 1.1. 

All this notwithstanding, apart from war-torn Afghanistan, Nepal will be the last country in the region to eradicate extreme poverty. We forecast that it will be beaten by one year by Bangladesh, which - although starting from a much worse position - is on a path to eradicate poverty by the end of 2022. We predict that Nepal too will get there eventually: by end of 2023, the country will have reduced its number of poor people from 4.6 million in 2010 (17,2% of population) to 215,000 in 2030 (0.6%). This, indeed, is good news from top of the world