Global household wealth is 20% above its pre-crisis highs after rising 8.3% to US$263 trillion, according to a new report from Credit Suisse Research Institute.
The report notes that household wealth is now 39% above its 2008 low. Moreover, it predicts that wealth will rise by almost 40% over the next five years, to reach US$369 trillion by 2019. And, it says that the number of millionaires worldwide is to increase by about 53% in the next five years to 53.2 million in 2019.
“North America and Europe stand out this year, with percentage gains exceeding 10% in both cases,” said Giles Keating, global head of research for private banking & wealth management, at Credit Suisse. “Developing economies have lagged as a result of weaker asset prices and currency pressures.”
Average net worth now sits at US$56,000 per adult in the world. North America and Europe led the gains with increases of about 11%, the firm says. Conversely, aggregate wealth in Latin America was largely unchanged, and the Asia- Pacific region (including China and India) recorded a small rise of around 3%.
The report says that aggregate household wealth has more than doubled since the start of the millennium from US$117 trillion in 2000 to US$263 trillion in mid-2014. Over the same period, it notes that global net worth per adult has increased by 77%, 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, it says.
Financial assets accounted for 55% of gross wealth in 2000, and fell to 49% by 2008. They now, once again, account for 54% of gross wealth, it reports.
On a global basis, Credit Suisse says that household debt relative to net wealth peaked in 2008, and is now down to 16.5%, which is the lowest level since 2001. However, over the last 15 years household indebtedness in developing economies has been rapidly increasing, it says.
Switzerland ranks first in average wealth per adult at US$581,000, followed by Australia and Norway. Canada does not rank in the top 10; however, it does come in at number nine in terms of media wealth per adult, at US$99,000 per adult, up 3.2% over the past year. Australia ranks first in media wealth at US$225,000.
The report also says that the number of millionaires has increased significantly since 2000, rising by 164% over that period, to 34.8 million individuals today. The U.S. leads the way, with 41% of global millionaires.
Worldwide there are 128,000 ultra high net worth (UHNW) individuals, people that have net assets exceeding US$50 million, up from 41,000 in 2000. The U.S. accounts for almost half of this population. China ranks second, with 6% of the UHNW population. There are 2,607 UHNWs in Canada, about 2% of the overall population.
Inequality rising in developing economies
Looking at wealth inequality, the report says that, since 2000, inequality has increased in Latin America and Africa, and to a greater extent in India and China. But, inequality has fallen slightly in Europe and North America, it says.
Credit Suisse Research Institute’s Markus Stierli added, “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.”
Looking ahead, wealth is expected to rise by 40% in the next five years in nominal terms. And, average wealth is expected to rise by 31% to US$74,000 in 2019. The repot predicts that the share of wealth in emerging markets will likely reach 21% by 2019, with the annual nominal increase projected to be 9.3% for emerging markets, versus 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. Wealth in India will also grow very rapidly, at an annual pace of nearly 9%, it says.
Estimates by Credit Suisse also suggest that the number of global millionaires could exceed 53 million by 2019, which would be a rise of more than 18 million. The number of millionaires in emerging economies is still far below the levels in the U.S. and Europe, but 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, it says.