NEW YORK (PNN) - April 10, 2021 - Very few, if any, financial outlets have been more outspoken over the last decade about the harm that governments can do micromanaging (and in this case, shutting down) economies than we have been.
A brand new report notes that due to the nonexistent pandemic (and the ensuing global stimulus response) more people than ever are falling out of the middle class. Published by Bloomberg, the report defines “middle income” earners as those making from $10 to $20 per day, smoothed out across geographical borders. Those making $20 to $50 per day are considered “upper middle income”.
These two brackets make up 2.5 billion people, or about 33% of the world’s population. Of that group are numerous stories from numerous countries of what Bloomberg calls “hard won successes that evaporated overnight”.
The outlook for the future doesn't look promising, either. The IMF predicts that the global economy in 2024 will be 3% smaller than it would have been if COVID hadn't happened. For example, India's GDP will be 5.2% smaller than it would have otherwise been.
In India, the report highlighted Ravi Kant Sharma, who had spent "more than a decade" saving up to buy a car. He started 2020 with enough for a down payment and plans to celebrate his wedding anniversary. By the end of the year, he had lost his job, ate into his savings, and had to put his car on hold.
“I have exhausted all my savings. We are finding it difficult to pay installments of existing loans,” he said. “My life has been set back by at least three years, even as my dreams have moved beyond my reach."
Francinete Alves of Brazil is also making sacrifices, eating kidney, tongue, liver and other organ meat sporadically as egg consumption in the meat-heavy country rises. Alves is still employed, making about $881 per month, but soaring food prices have caused her to make changes in her diet. She now looks for discounts at butcher shops before she goes grocery shopping.
“In the past, 20 reals was enough for you to leave here with a lot of things. I keep thinking about people who have a family to support and receive only a minimum wage,” Alves says. “I honestly don’t know how they live”
In South Africa, 26-year-old Mosima Kganyane had finally leased her own apartment. After COVID hit, her employer faced bankruptcy and laid her off, contributing to the country's 32.5% unemployment rate. She paid a $271 fee to break her lease and move back in with her family. She now works a temp job and has spent $1,000 to put an addition on her parents’ house so she could rent a room.
She said, “COVID-19 taught me not to relax and that I need to fight, to fight for survival because I don’t know what tomorrow holds.”
In Bangkok, food vendors like Yada Pornpetrumpa are dealing with a smaller, laid back crowd of tourists to sell to after losing 75% of their business. She now lives on government assistance and her income has plunged 90% per day.
“Before all of this, when I started setting up my shop there would already be a line for fruit juice,” she says. “I had a 50% profit on everything I sold.”
Sadly, she concluded with an affirmation that despite having few assets, she remains happy: “Having a car or a house is just what society tells us we should value, but it doesn’t define the middle class. I have no assets now. But I have peace of mind.”