Global household wealth increases by 8.3% to USD 263 trillion, driven by wealth growth in the United States and Europe
The world’s rich is getting richer, with 0.7% of the rich now owning more than 48% of global wealth – according to the latest Credit Suisse Global Wealth Report.
The Global Wealth Report shows that inequality is extreme and growing, and warns of the growing inequality could be a trigger for recession.
Global wealth per adult reaches a new all-time high of USD 56,000, rising by USD 3,450, the highest increase recorded since the financial crisis
The Credit Suisse Research Institute’s fifth annual Global Wealth Report, finds that from mid-2013 to mid-2014 aggregate global household wealth increased by 8.3% in current dollar terms to USD 263 trillion, despite an ongoing challenging economic environment.
“The findings show that inequality has tended to rise since 2008, particularly in developing economies.” ~ Markus Stierli, Credit Suisse Research Institute
Key findings of the report:
- Global wealth stands 20% above its pre-crisis peak and 39% above its 2008 low.
- Wealth is likely to rise by nearly 40% in the next five years, reaching USD 369 trillion by 2019
- Emerging markets are to increase their share of global wealth to 21% by 2019, with China alone expected to represent nearly 10% of global wealth against just over 8% today.
- Wealth inequality has increased since 2008, especially in emerging economies like China and India.
- The USA has achieved a sizable increase in wealth since mid-2013, with a rise of USD 8.9 trillion. It will remain the undisputed leader in terms of aggregate wealth, with total net worth of more than USD 114 trillion by 2019.
- In Europe, wealth per adult has increased by more than 10% as a result of a strong recovery in asset prices.
- Switzerland ranks highest in average wealth, and has reached a new high of USD 581,000 per adult. Median wealth per adult in Australia, however, stands at USD 225,000, far outstripping Swiss median wealth of USD 107,000.
- The number of millionaires worldwide is to increase by about 53% in the next five years, reaching 53.2 million in 2019.
Giles Keating, Global Head of Research for Private Banking & Wealth Management, Credit Suisse, said: “The fifth annual Credit Suisse Global Wealth Report shows a USD 20.1 trillion rise in wealth to USD 263 trillion. North America and Europe stand out this year, with percentage gains exceeding 10% in both cases. Developing economies have lagged as a result of weaker asset prices and currency pressures.”
Credit Suisse Research Institute’s Markus Stierli said: “This year’s report puts wealth inequality under the lens, and the findings show that inequality has tended to rise since 2008, particularly in developing economies. The financial crisis has acted as a breakpoint in inequality, as most countries were showing a flat or declining trend before 2007.”
The analysis comprises the wealth holdings of 4.7 billion adults across more than 200 countries – from billionaires in the top echelon to the middle and bottom sections of the wealth pyramid.
The Global Wealth Pyramid
World Wealth Levels
Highlights of the Global Wealth Report 2014
Changes in wealth from 2013-2014
Total global household wealth increased in current dollar terms to USD 263 trillion, or USD 56,000 per adult in the world, an all-time high for average net worth – underpinned by a strong recovery in asset prices. On a regional basis, North America and Europe led the gains with increases of about 11% (Table 1). In contrast, aggregate wealth in Latin America was largely unchanged, whereas Asia-Pacific (including China and India) recorded a small rise of around 3%. Excluding Japan, the region recorded a gain of about 4%, with Chinese wealth rising by 3.5% and Indian wealth falling by -1%.
At the country level, among the major economies, the UK, South Korea and Denmark recorded the largest percentage gains, while Ukraine, Argentina and Indonesia incurred the largest losses. In absolute terms, the UK added USD 2.3 trillion, while strength in the euro and strong equity markets meant that France, Germany and Italy together added USD 3.6 trillion to the stock of global wealth. The G7 economies accounted for a share of 64% of total wealth in mid-2013, but for more than 78% of newly created wealth since then. Indonesia, Russia and Argentina recorded the largest USD losses.
Wealth trends since 2000
Aggregate household wealth has more than doubled since the start of the millennium from USD 117 trillion in 2000 to USD 263 trillion in mid-2014. Over the same period, personal wealth in India and China has risen by a factor of 3.1 and 4.6 respectively. Allowing for the rise in the adult population, global net worth per adult has increased by 77% from 2000, an average growth rate of 4.3% per annum. Despite recording a 15% decline during the financial crisis, wealth per adult has increased each year since 2008 and is now 7% above its pre-crisis peak.
The share of financial wealth was 55% of gross wealth in 2000, and fell to 49% by 2008. Following the recovery of asset prices, financial assets have trended upwards since then, and now account for 54% of gross wealth. Household debt relative to net wealth peaked in 2008 and is now at 16.5%, the lowest level since 2001. However, over the last 15 years household indebtedness in developing economies has been rapidly increasing.
Wealth of nations: Top ten countries with the highest average wealth per adult in mid-2014 (USD)
The richest nations, with wealth per adult over USD 100,000, are found in North America, Western Europe and among the rich Asia-Pacific and Middle East countries. Switzerland is the country with by far the highest wealth per adult, followed by Australia and Norway (see Table 2). Denmark and the UK have moved up two places and now rank 8th and 9th respectively in terms of wealth per adult. Singapore has lost three places, but is still among the top ten.
Wealth distribution in history
Since 2000, wealth inequality has increased in Latin America and Africa, and to a greater extent in India and China, but fallen slightly in Europe and North America. Prior to 2007, most countries show little change in inequality, or a slight decline; after 2007, wealth inequality has tended to increase.
Top of the wealth pyramid
The new data on millionaire trends indicates that the number of millionaires has increased significantly since 2000, rising by 164% over the period, to 34.8 million individuals today. The USA has 41% of global millionaires. From 2007 to 2009, the number of HNW individuals in Europe briefly overtook the USA, only to fall behind since then. Japan’s share also fell to below 10% a year ago and is now down to 8%.
Worldwide there are 128,000 UHNW individuals, those with net assets exceeding USD 50 million, against 41,000 in 2000 (Table 4). Of these, 45,000 are worth at least USD 100 million (against 14,000 in 2000) and 4,300 have assets above USD 500 million (1,200 in 2000). The USA dominates the regional ranking, with 63,000 UHNW residents (49%), while Europe has 31,000 (24%), and 26,000 (20%) reside in Asia-Pacific, including China and India. China today has as many UHNW individuals as all of Europe had in 2001.
The outlook for wealth
Wealth is expected to rise by 40% in the next five years in nominal terms, reaching USD 369 trillion by 2019. Average wealth is expected to rise by USD 18,000 per adult worldwide (31%), from USD 56,000 to USD 74,000 in 2019. The share of wealth of emerging markets will likely reach 21% by 2019, which amounts to USD 76.4 trillion. The annual nominal rate of increase is projected to be 9.3% for emerging markets against 6.4% for developed markets.
Among the major economies, household wealth in China will likely continue to grow at a rapid pace of 11% over the next five years, reaching USD 36.2 trillion in 2019. The USA will still account for 31% of global wealth in 2019 with USD 114.5 trillion. Wealth in India will also grow very rapidly, at an annual pace of nearly 9% to USD 5.5 trillion in 2019. On a per adult basis, China will increase its wealth by USD 13,000 to USD 34,400 and India by USD 1,700 to USD 6,400.
Estimates by Credit Suisse suggest that the number of global millionaires could exceed 53 million in 2019, a rise of more than 18 million (Table 5). While the number of millionaires in emerging economies is still far below the levels in the USA (20 million) or Europe(19 million), it is expected to increase substantially over the next few years. China could see its number nearly doubling by 2019, to 2.3 million adults. Brazil and Mexico will underpin the number of millionaires in Latin America, which could reach 921,000 in five years.
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