Global wealth declines for the first time since 2008.
The year 2022 recorded the first drop in net global household wealth since the global financial crisis of 2008.
Wealth evolution grew rapidly in 2021 but inflation, rising interest rates and currency depreciation caused a reversal last year, according to a new report by Credit Suisse and UBS.
In the 2023 edition of the Global Wealth Report, global wealth fell 2.4 per cent to USD454 trillion while wealth per adult dropped 3.6 per cent to USD84,718 last year.
In terms of wealth per adult, Switzerland continues to top the list followed by the United States (US), Hong Kong SAR, Australia and Denmark.
In a press release, UBS Global Wealth Management President Iqbal Khan said, “As the world’s largest truly global wealth manager, we are uniquely positioned to draw on knowledge and insights from across our wealth management business.
“This year’s Global Wealth Report reveals valuable insights about the state of our economy and society, as well as the shifting meaning and potential of prosperity.
“This sweeping analysis of household wealth covers the estimated wealth holdings of 5.4 billion adults around the world and across the wealth spectrum.
“It looks to future trends, helping us to frame expectations, understand the ever-changing nature of wealth creation, and better conceive of the power of wealth to broadly benefit our society.”
According to the report, loss of global wealth was mainly in wealthier regions such as North America and Europe, which together lost USD10.9 trillion.
Asia Pacific recorded a loss of USD2.1 trillion, while Latin America as an outlier recorded a wealth increase of USD2.4 trillion.
US recorded the most loss among the countries, followed by Japan, China, Canada and Australia. In contrast, Russia recorded the largest wealth increase along with Mexico, India and Brazil.
Overall wealth inequality also declined in 2022, with the wealth share of the global top one per cent falling to 44.5 per cent.
About 3.5 million people lost their millionaire status. But global median wealth, which the report highlights is arguably a more meaningful indicator of how the typical person is faring, increased by three per cent.
WEALTH DISTRIBUTION
The distribution of wealth worldwide is illustrated with a wealth pyramid in the report. The bottom segment accounts for half of the global population with a wealth less than USD10,000 in 2022.
The next segment, accounting for a third of the global population, have a wealth range of USD10,000-USD100,000.
The upper-middle segment, with a wealth ranging from USD100,000 to USD1 million, accounts for 12 per cent. Meanwhile, the top segment consists of millionaires and accounts for one per cent of the population.
According to the report’s estimates, the bottom 50 per cent of adults in the global wealth distribution pyramid accounted for less than one per cent of total global wealth at the end of 2022.
In contrast, the richest decile (the top 10 per cent) owns 81 per cent of global wealth.
MILLIONAIRE TRENDS
The report estimates that there were 59.4 million millionaires at the end of 2022, a drop of 3.5 million from the previous year. Many countries recorded large declines particularly the US (–1.8 million), Japan (–466,000), the United Kingdom (–439,000), Australia (–363,000), Canada (–299,000) and Germany (–253,000).
Meanwhile, a few countries recorded an increase in millionaires led by Norway (+104,000), Iran (+104,000) and Brazil (+120,000).
US has the most millionaires in 2022, with over 22 million people followed by China with over six million people.
Despite the wide gap between US and China at the top of the world millionaire table, the number of millionaires in China is projected to rise rapidly, according to the report.
OUTLOOK
Global wealth is projected to rise by 38 per cent over the next five years, reaching USD629 trillion by 2027.
Over half of the growth is attributed to low- and middle-income countries, although they account for less than a third of current wealth. Global trends will be primarily driven by growth of middle-income countries.
In the next five years, average annual growth in low-income countries is projected to be 11.8 per cent and 10.7 per cent in middle-income countries. High-income countries are projected to have a lower annual growth at 4.5 per cent.
Wealth per adult is projected to reach USD110,270 in 2027, and the number of millionaires is expected to reach 86 million. – Aqilah Rahman
