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Global Wealth Has Grown Sharply in 2017

Credit Suisse's annual Global Wealth Report was published recently. Gains in the equity markets and rises in non-financial assets have led to an increase in global wealth of an intensity last seen in 2012. The study on global wealth provides some interesting insights. 

The Credit Suisse Global Wealth Report 2017 reveals interesting developments, which give rise to both confidence and disquiet. To begin with, total private wealth increased by +6.4% in 2017, a high rate. It was a good year for asset-holders, as the following chart depicts.

Another positive factor is that global prosperity in 2017 is attributable not only to the healthy equity markets, but also and in particular to creative entrepreneurial forces. The average +6.4% increase in private wealth exceeds both demographic growth and average stock market gains. This also means that the gap between rich and poor has narrowed marginally – however, it is still too wide, especially in Africa and South America.

wealth-has-increased-globally

Annual change (%) in global, private wealth and its components, 2000–2017 

Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2017, Credit Suisse Research Institute 

Switzerland Is at the Top in Terms of Wealth

The following table illustrates that last year the US – and India, though on a smaller capital base – reported the greatest increase in wealth at nearly 10%. The average wealth per capita there is also high at USD 375,000.

Switzerland remains in first place with private wealth per capita at CHF 537,000. Over two-thirds of all Swiss citizens have savings of more than CHF 100,000 and nearly 9% of the population have assets that exceed CHF 1 million.

Change in total private wealth by region, 2016–2017 

  Total wealth
Change in total wealth Wealth per adult Change in wealth per adult Change in financial assets Change in non-financial assets Change in debts
2017 2016-17 2016-17 2017 2016-17 2016-17 2016-17 2016-17 2016-17 2016-17 2016-17
USD bn USD bn % USD % USD bn % USD bn % USD bn %
Africa 2'499 22 0.9 4'166 -1.9 51 4.1 -10 -0.7 18 7.0
Asia Pacific 55'052 396 0.7 47'479  -1.0 201 0.6 497 1.6 302 3.5
China 29'000 1'718 6.3 26'872 5.6 302 2.2 1'601 10.2 186 7.8
Europe 79'639 4'757 6.4 135'163 6.3 2'621 6.6 2'797 5.8 662 5.3
India 4'987 451 9.9 5'976 7.9 64 9.1 470 11.0 83 19.5
Latin America 8'107 302 3.9 19'049 2.1 124 4.5 271 4.3 94 7.4
North America 101'005 9'097 9.9 374'869 8.8 6'313 8.4 3'441 10.7 657 4.3
World 280'289 16'744 6.4 56'541 4.9 9'676 5.8 9'068 6.5 2'002 4.9

Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2017, Credit Suisse Research Institute 

Findings from the Global Wealth Report

Some further key observations:

  • The emerging markets’ share of global wealth is steadily increasing. From 2000 to today, the figure has doubled from around 10% to nearly 20%.
  • Currencies play a big role here. The strong franc is a predominant factor in Switzerland’s high level of per-capita wealth. On the other hand, weak currencies, especially in Japan, the UK and Egypt, have taken a heavy toll.
  • Despite economic growth, imbalances have become more pronounced. 70% of the global population share less than 3% of global assets.
  • Imbalance is not just a regional phenomenon, it is also a matter of demographics. Today’s millennials possess far less wealth than their parents, while simultaneously carrying a relatively high level of debt, particularly in the form of student loans. This starting position has lasting effects on their economic behavior.
regional-growth-in-wealth

Regional growth in wealth, 2000–2017 

Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2017, Credit Suisse Research Institute 

Beneficiaries from Growing Wealth

Two beneficiaries, in terms of investment policy, of the ongoing increases in wealth in emerging economies, particularly Asia, are consumption, which is enjoying a rapid rate of growth, and the resulting fast pace of development in urban infrastructure. China’s e-commerce giant Alibaba recently set a new record for single-day sales, breaking the USD 25 billion barrier.

Rising demand for tourism, gastronomy, hotels and luxury goods further expresses this structural growth. This in turn promotes infrastructure development in the areas of mobility, energy and water – a trend with disproportionate growth prospects.