Favorable global growth environment continued in 2005.  Growth per capita for low and middle-income countries averaged just under 5 percent in 2005, well above historic rates—aided by buoyant trade, low interest rates, and strong growth in OECD countries. This helped reduce total developing-country poverty by an estimated X percent between 2000 and 2005, moving approximately X million out of poverty.

Improvement in macro policy management. Many low-income countries now have adequate/good fiscal policies, with 90 percent pursuing adequate/good monetary and foreign exchange policies. Middle-income countries are more resilient to economic shocks. But much room for improvement remains. 

Uneven gains. Most gains occurred in East and South Asia, Eastern Europe and Central Asia. In Latin America, growth is up over the past two years, but not enough to make strong inroads into poverty. African growth has also improved, rising to more than 2 percent per capita in 2005, but few countries are likely to reach the income poverty target. Improved performance in some countries demonstrates the African potential for more rapid progress.

Risks to fairly good near-term prospects for growth and income-poverty reduction include high oil prices, abrupt adjustment in global current account imbalances, further hikes in global interest rates, failure of trade talks, and the potential effects of avian influenza. 

To strengthen poverty reduction, more emphasis is required in the domestic growth environment—on improving the investment climate, strengthening access to basic infrastructure, and enhancing opportunities for poor and vulnerable groups.