Il Credit Suisse Research Institute today released the seventh edition of the Global Wealth Report annual. According to the report, overall global wealth growth remained subdued in 2016, mirroring the trend that emerged in 2013 and fully reversing that of double-digit growth recorded before the 2008 global financial crisis. In the medium term, only an acceleration is expected. moderate. Switzerland once again ranks as the global leader in terms of average wealth per adult in 2016.
As shown in the latest edition of the CSRI Global Wealth Report, total global wealth in 2016 grew by only 3,5 trillion dollars, reaching a total of 256 trillion dollars (+1,4%), growth in line with the increase in the number of adults worldwide. This means that wealth per adult equals dollars 52.800 is in line with the previous year.
The trend of wealth in Italy
In 2016, the average net wealth per Italian adult in dollars was 202.288 per person (equal to approximately 190 thousand euros) down from 2015 by 1,1% in which it stood at 204.601 dollars per adult. At constant exchange rates, the decrease was approximately 0,8%. The average wealth per adult Italian has grown by 2000 3,3% per annum at current exchange rates and 2,2% per annum at constant exchange rates, ie without the dollar effect. Average wealth is calculated as the sum of movable and real estate wealth.
The decrease in wealth in Italy was mainly driven by the decrease in movable wealth which fell by 6,1% per adult in the 2015/2016 period at current exchange rates and by 5,8% at constant exchange rates. Market capitalization tended to shrink by around 10% in France and Germany, while Italy and the UK performed even worse. In terms of millionaires in dollars, 41% of millionaires reside in the USA, followed by Japan with 9%, the United Kingdom with 7%, France, Germany and China with 5% while Italy together with Canada and Australia has the 3% of the world's millionaire share, followed by Switzerland and Korea with 2%. The UK has lost about 15% of its dollar millionaires (mainly to the effect of the exchange rate).
The number of Italian millionaires has increased from 1.143.000 in 2015 to 1.132.000 of 2016 with a reduction of 11 thousand individuals. In Europe, Germany, Belgium and Spain saw the share of millionaires increase by 44, 16 and 7 respectively over the same period.
Brexit has had a negative impact on wealth
The UK experienced a significant decline in wealth, with household wealth declining by $1,5 trillion, in response to Brexit, which triggered a sharp decline in both exchange rates and equity markets . Michael O'Sullivan, Chief Investment Officer of International Wealth Management at Credit Suisse, said: “The impact of Brexit has already been extensively analyzed in terms of GDP, but the impact on household wealth deserves consideration. Since the Brexit vote, UK household wealth has shrunk by $1,5 trillion. Wealth per adult has already dropped by dollars 33.000, reaching $289.000 since the end of June. In fact, when US dollars are used as a benchmark, 406.000 people in Britain are no longer millionaires.”
Wealth in Japan increases, China's wealth distribution increasingly unequal
The Global Wealth Report also highlights the impact of unfavorable currency movements, which have caused wealth to decline in every region except Asia-Pacific1. The largest increase in wealth among individual countries has been achieved since Japanand with an overall increase of $3,9 trillion, followed by an increase of $1,7 trillion in the United States. Switzerland once again leads the league table in terms of average wealth per adult. Indeed, despite a decline in average adult wealth, its leading position remains unchallenged.
Loris Centola, Global Head of Research International Wealth Management at Credit Suisse, said: “The fallout from the 2008-2009 economic downturn will continue to have a significant impact on growth, which is trending increasingly towards long-term stagnation. The emergence of a multipolar world, confirmed by the impact of the Brexit vote in the UK and the US presidential election, is likely to exacerbate this trend, which could lead to a “new normal” of low interest rates even for regarding the growth of wealth”.
Outlook on wealth
Wealth growth has slowed in recent years, but we expect a moderate acceleration and estimate that total global wealth will reach $334 trillion by 2021.
Developing economies will likely outpace the developed world in terms of wealth growth, but will still account for just under a quarter of growth over the next five years. To give a better idea, they currently represent about 18% of household wealth, up from 2000, when they accounted for only 12%.
China is expected to account for more than half of the expected growth in these economies, with more than 7% coming from India. Trends in the number of millionaires.
The number of millionaires grew by 155% globally, while the number of UHNWIs grew by 216, making them by far the fastest growing group of wealth holders.
The world's 12,4 million millionaires in 2000 were highly concentrated (96%) in high-wage economies. Since then, 20 million "new millionaires" have joined the total, some 2,6 million of whom - 13% of the total - come from emerging economies.
In this century, no other segment of the wealth pyramid has had such a development as the millionaires and the UHWNI segment.
The number of millionaires could reach 45,1 million in 2021, while the number of UHNWIs could rise from 141.000 to 208.000.
The pyramid of wealth
Debates about the possession of wealth focus exclusively on the top of the pyramid. The Global Wealth Report provides a more complete and balanced picture, as we believe the base and middle section are also attractive.
One reason is the number and political power of people belonging to these groups. Their combined wealth of $35 trillion still produces considerable economic opportunities, which are often overlooked. It is important to address the needs of these asset owners because they can drive new trends in both the consumer and financial sectors.
A full pyramid of wealth makes clear the contrasts between those with net wealth of a million dollars or more, who occupy the top tier, and those who occupy the lowest rung in the hierarchy.
China, Korea and Indonesia are examples of countries where individuals have risen rapidly from this very segment of the wealth pyramid.
India has not shown such progress at present, but has the potential to grow rapidly in the future from its rather low starting point.
The poorest billion
This year's special theme is the bottom of the wealth pyramid. Relatively little is known about this group, both because the data are incomplete and because usually all attention is focused on the highest part.
The bottom half of the world's wealth distribution is made up mostly of adults from India, Africa and parts of the Asia-Pacific region. However, the past 20 years have seen a growing incidence of low wealth even in high-income countries.
About 9% of the world's adults are in debt beyond their means, a rather worrying figure considering that interest rates are close to their lowest in years.
Inequality
The Global Wealth Report estimates that those at the top of the pyramid own 50,8% of global household assets, above 2000 levels.
Changes in wealth inequality unfold slowly, making it difficult to identify the drivers of the different trends. However, the value of financial assets – especially corporate securities – are likely to become a major factor because wealthier individuals hold an extremely disproportionate portion of their assets in financial instruments.
The future implications of this correlation are particularly significant. If stock prices do not rise rapidly in the coming years, and the share of financial wealth stabilizes – or perhaps decreases – then the growth in wealth inequality seen in recent years could halt, if not even reverse.
