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Global wealth is growing. China and India are benefiting most.

Global wealth increased by 4.6% last year. This is evidenced by the Credit Suisse Global Wealth Report. However, wealth has not increased equally everywhere. Important insights and perspectives for investors.

According to the Global Wealth Report, assets continued to grow

Over the past 12 months, global wealth has increased by USD 14 trillion and now totals 317 trillion. The growth rate of 4.6% may be somewhat lower than the previous year, but is still higher than the average growth since the financial crisis of 2008. Of positive note is the fact that prosperity per capita also increased owing to asset growth outpacing population growth. Assets per adult now amount to USD 63,100 on average – an increase of 3.2%.

Once again, prosperity increased most in the US. Behind it, China positioned itself in second place. It overtook Japan in terms of total assets, number of millionaires, and number of ultra-wealthy individuals. However, wealth is unevenly distributed. With regard to average assets per capita, China is lagging behind developed markets.

Changes in total private assets by region from 2017 to 2018

  Total assets Change in total assets Assets per adult Change in assets per adult
  2018 2017–2018 2017–2018 2018 2017–2018
  USD bn USD bn % USD %
Africa 2,553 108 4.4 4,138 1.5

Asia-Pacific

56,715

929

1.7

48,119

0.0

China

51,874

2,266

4.6

47,810

4.0

Europe

85,402

4,432

5.5

144,903

5.4

India

5,972

151

2.6

7,024

0.7

Latin America

8,055

-415

-4.9

18,605

-6.5

North America

106,513

6,486

6.5

391,690

5.5

World

317,084

13,958

4.6

63,100

3.2

Source: James Davies, Rodrigo Lluberas, and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2018

Wealth is unevenly distributed – China is catching up

Since the turn of the millennium, global wealth has increased sharply, from USD 117 trillion to the current total of USD 317 trillion. The only significant decrease was due to the financial crisis of 2008; however, that has long since been recovered.

What is interesting is the change in asset distribution: In 2000, 92% of assets belonged to North America, Europe, and the Asia-Pacific region (without China and India). To date, their share has decreased to 78%. While this is still a high percentage, China in particular has been catching up. During the same period, its share rose from 3.1 to 16.4%. Additionally, the share of all emerging markets in global assets rose from 10 to 24%.

distribution-of-global-assets

Growth of global wealth, adjusted for exchange rates

Source: James Davies, Rodrigo Lluberas, and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2018

Share of emerging markets in global assets is continuing to grow

The Global Wealth Report forecast indicates a likely continuation of this trend. By 2023, China's share of global wealth could increase to 19%. Over the next five years, growth worth USD 23 trillion is expected, which would be a 44% increase of Chinese assets.

Economists at Credit Suisse are expecting a similar scenario for emerging markets in general. Their growth rate may have slowed down over the past five years, but emerging market economies are likely to recover. The projected annual growth rate of 7% is clearly above the projected 4% for developed countries. This would lead to an increase of the emerging market share in global wealth to 27% in 2023.

assets-of-emerging-markets

Assets of emerging markets as a percentage of global assets

Source: James Davies, Rodrigo Lluberas, and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2018

China and India will see especially strong increases in wealth

Countries in the middle-income segment will benefit most. It is expected that they will be able to post one-third of global wealth growth. Over the next five years, their share of global wealth should increase by 2% to 23%, with China being the main driver.

In contrast, among countries with low or low to medium incomes, India stands out. According to forecasts, Indian wealth should increase over the next 5 years by 47%, a plus of USD 2.7 trillion. In contrast, growth in Latin America should continue to be curbed by the crises in Brazil and Argentina.

share-of-wealth-per-country-group

Share of global wealth and asset growth by country group

Source: James Davies, Rodrigo Lluberas, and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2018

Global wealth of USD 399 trillion in 2023

Overall, within the next 5 years, global wealth should increase by 4.7% annually, according to the Global Wealth Report. This would be equivalent to an extra USD 82 trillion by 2023. What is remarkable is that real assets are likely to exceed financial market growth – by one percent annually on average. In percentage terms, however, household debt is rising even more. Over the next 5 years, an increase of 41% to 14% of gross assets is expected.