The world has never been richer. Global wealth has hit $241 trillion, more than double what is was at the start of the century, according to the new edition of Credit Suisse’s Global Wealth Report. In the 12 months to mid-2013, global wealth rose by 4.9%, and, adjusting for fluctuations in the U.S. dollar’s exchange rate, by 6.9% in constant dollar terms.
Average household net worth reached $51,600. Bull equity markets boosting financial assets were a big reason that wealth rose in North America and the Asia-Pacific region excluding China. In China and India particularly, but also in all other regions generally, non-financial assets, such as real estate, accounted for most of the increase.
Among countries, the U.S. saw the largest total wealth gain over the 12 months, at $8.1 trillion, followed by China ($1.4 trillion) Germany ($1.2 trillion) and France ($1.1 trillion). The top dozen gainers also include Mexico, India and South Korea. Japan was the largest loser in dollar terms, down $5.8 trillion as Abenomics drove the yen-dollar exchange rate down by 22%.
Households have by now recovered all the wealth they lost in the 2008 global financial crisis. Aggregate global wealth actually passed the pre-crisis peak in 2010, though regionally Europe and Africa still remain below their 2007 levels. But wealth has not returned to all equally. Gains have disproportionately accrued to the rich. Wealth inequality remains high as Credit Suisse notes:
An adult requires just $4,000 in assets to be in the wealthiest half of world citizens. However, a person needs at least $75,000 to be a member of the top 10% of global wealth holders, and $753,000 to belong to the top 1%. Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest 10% hold 86% of the world’s wealth, and the top 1% alone account for 46% of global assets.
Credit Suisse’s global wealth pyramid (above) stratifies the world’s households by wealth. There are 1 billion adults that it counts as middle class in the context of global wealth (net assets of $10,000–$100,000). The regional composition of this group matches the regional distribution of adults in the world, although India and Africa are underrepresented and China is overrepresented.
Brazil, China, South Korea and Taiwan are countries that are rising quickly through this part of the wealth pyramid, with Indonesia close behind. India accounts for just 4% of the global middle class, and has been growing its share slowly in recent years. After three decades of double-digit growth that has lifted millions out of poverty, China’s share, on the other hand, has been growing fast. It now accounts for more than one-third of the global middle-class, an eight times larger share than India.
Credit Suisse expects global wealth to rise by nearly 40% over the next five years, to $334 trillion. Emerging markets would see 29% of that growth with China accounting for nearly half of that. (China and India have seen their total wealth almost quadruple and more than double respectively since the start of the century.) While the number of millionaires and billionaires will rise markedly over the next five years — the 50% increase forecast by Credit Suisse would mean that the ‘nation’ of millionaires would by then be bigger than the current population of Spain — wealth growth will be driven primarily by the growth of the ascendant middle class in the fastest growing emerging economies.
— Paul Maidment & Alex Erquicia