The report describes the financial crisis as no more than a modest setback in a benign decade for household wealth accumulation’
While many financial commentators speak of the risk of global economic meltdown, the Credit Suisse report describes the financial crisis as ‘no more than a modest setback in a benign decade for household wealth accumulation’. Since 2000 global net worth per adult has risen by 67 per cent in current US dollars or 36 per cent when exchange rates are held constant.
Total household wealth has reached all time highs in all regions bar North America and Europe, the second Credit Suisse Global Wealth Report has found, with total global wealth increasing to USD 231 trillion from USD 195 trillion in 2010.
The report forecasts that by 2016 global wealth will increase by 50 per cent to USD 345 trillion, with China alone adding USD 18 trillion to the stock of global wealth. In the next five years China is expected to surpass Japan as the second wealthiest country in the world, but despite growing wealth creation in emerging economies, the USA is set to remain at the top of the list.
Credit Suisse’s wealth report differs from wealth reports published by banks such as Merrill Lynch and Julius Baer in that it covers the ‘entire wealth pyramid’ and not only HNW or UHNWs. The authors argue that household wealth is a ‘vital but under-researched cog in the financial system’.
The report’s broad focus also allows it to shed light on the scale of global inequality: the richest 10 per cent hold 84 per cent of the world’s wealth, while the bottom 50 per cent hold 1 per cent of the world’s wealth, it finds.
To count among the richest half of the world’s population an adult need only have USD 4,200 in assets once debts have been subtracted. Similarly an adult needs assets of USD 82,000 to count in the top 10 per cent, and USD 712,000 to make the richest 1 per cent of the world’s population.
The countries with the highest levels of wealth per adult are the small dynamic economies of Switzerland (with an average wealth of USD 500,000 per adult), Singapore, Norway, Sweden, Belgium — as well as France and Australia, the report reveals.
For the first time the number HNWs in Europe (with assets of USD 1-5 million) has overtaken North America, with Europe home to 37.2 per cent of HNWs and North America 37 per cent. The Asia-Pacific region (excluding China and India) is home to 19.2 per cent of HNWs, China 3.4 per cent, with India, Africa and Latin America accounting for the remaining 3.2 per cent.
North America, however, is still home to 44 per cent of the world’s UHNWs, with Europe accounting for 28 per cent, Asia Pacific (excluding China and India) 15 per cent. The USA has the highest number of UHNWs, being home to 35,400 individuals with a net worth of USD 5 million or more, while China is in second place and is home to 5,400 UHNWs.
Average wealth has grown steadily in the 100 years to 2006, but despite weak recovery global wealth has not yet reached its 2006 peaks when average wealth per person was USD 200,000.
The report notes that Britain has data on household wealth dating back to a century, and these reveal that wealth per person decreased substantially since 1900 and 1970 due the effect of two world wars, taxation, more equal division of estates on death, and the spread of popular assets like consumer durables and owner occupied housing. Wealth per adult today is above that of 2000, but has not surpassed its 2007 peak of USD 320,000.
Wealth per adult in China has tripled since 2000 to reach USD 21,000 in 2011, and has exceeded pre-recession levels. Inequality is relatively low by global standards.
Wealth per adult in India has almost tripled from USD 2000 in 2000 to USD 5,500 in 2011. Not everyone has shared in this wealth creation however, with 43 per cent of adults having a net worth of less than USD 1000 (well below the global average of 27 per cent).
by Sophie McBain