Global Wealth Reaches New All-Time High
Despite a decade of negative real returns on equities, several equity bear markets and the collapse of housing bubbles, the 2013 Credit Suisse Wealth Report finds that global wealth has more than doubled since 2000, reaching a new all-time high of 241 trillion US dollars. Strong economic growth and rising population levels in emerging nations are important drivers of this trend. Average wealth per adult has also hit a new peak of 51,600 US dollars, but inequality remains high.
Despite the continuing challenges posed by the economic environment, the underlying factors this year have been broadly positive for global household wealth. For the world as a whole, we estimate that personal wealth increased by 4.9 percent during the year to mid-2013 and now totals 241 trillion US dollars. Aggregate total wealth passed the pre-crisis peak in 2010, and since then has set new highs every year. Average wealth also established a new high at 51,600 US dollars per adult, the first time that average global wealth has passed the 50,000 US dollar threshold since 2007.
A Tale of Two Countries: The United States and Japan
Looking in more detail at the global pattern, the story this year is a tale of two countries. The United States posted a fifth successive year of rises in personal wealth. Fuelled by a recovery in house prices and a bull equity market which drove the Dow Jones to new highs, the United States added 8.1 trillion US dollars to the global wealth stock, increasing wealth ownership by 12.7 percent to 72.1 trillion US dollars. This is 20 percent more than the pre-crisis high in 2006 and 54 percent above the recent low in 2008.
Aggressive monetary policy by the Bank of Japan (BOJ) spurred an even greater rise in equity prices – up 52 percent in the year to mid-2013. But equities in Japan are very low by international standards, accounting for less than 10 percent of household financial wealth, and the same aggressive BOJ policies drove the yen-USD exchange rate down by 22 percent. As a consequence, total household wealth in Japan has fallen by 5.8 trillion US dollars this year, equivalent to 20 percent of Japanese net worth. Japan suffered very little during the global financial crisis – in fact personal wealth grew by 21 percent between 2007 and 2008. However, in marked contrast to recent performance by the United States, total wealth is now just 1 percent above the 2008 level. In most other parts of the world, the economic environment has been generally favorable to wealth acquisition.
Winners and Losers Among Countries
The extent to which the United States and Japan dominate the world picture this year is illustrated by the figure, which shows the countries with the largest total wealth gains and losses. China (1.4 trillion US dollars), Germany (1.2 trillion US dollars) and France (1.1 trillion US dollars) are the only other countries where the change in wealth exceeded 1 trillion US dollars. Total wealth changed in a further eight countries by more than 200 billion US dollars (all gains): Italy, the United Kingdom, Spain, Mexico, Sweden, India, Korea and Canada. The equity price increase and the slightly favorable euro-dollar movement enabled the Eurozone countries to recover more than half of the very large wealth loss experienced 12 months earlier. The United Kingdom, India and Switzerland also managed to recover a significant portion of recent losses.
Wealth Per Adult Across Countries: Switzerland Remains On Top
As already noted, global household wealth equates to 51,600 US dollars per adult, a new all-time high for average net worth. This average global value masks considerable variation across countries and regions, as is evident in the figure. The richest nations, with wealth per adult over 100,000 US dollars, are found in North America, Western Europe, and among the rich Asia-Pacific and Middle Eastern countries. They are headed by Switzerland, which in 2011 became the first country in which average wealth exceeded 500,000 US dollars. It dropped below this mark in 2012, but this year equity price rises resulted in a new peak value of 513,000 US dollars per adult. Australia (403,000 US dollars), Norway (380,000 US dollars) and Luxembourg (315,000 US dollars) all experienced an increase in wealth per adult and retain their respective second, third and fourth places from 2012. The United States, Sweden, France, Singapore, Belgium and Denmark are close behind, with average wealth per adult in the 250,000 to 300,000 US dollar range. A year ago, Japan moved up to fourth place in the table, but it has now been demoted and no longer ranks among the top ten countries.
Distribution of Wealth Across Individuals: Inequality Remains High
To determine how global wealth is distributed across households and individuals – rather than regions or countries – we combine our data on the level of household wealth across countries with information on the pattern of wealth distribution within countries. Our estimates for mid-2013 indicate that once debts have been subtracted, an adult requires just 4,000 US dollars in assets to be in the wealthiest half of world citizens. However, a person needs at least 75,000 US dollars to be a member of the top 10 percent of global wealth holders, and 753,000 US dollars to belong to the top 1 percent. Taken together, the bottom half of the global population own less than 1 percent of total wealth. In sharp contrast, the richest 10 percent hold 86 percent of the world’s wealth, and the top 1 percent alone account for 46 percent of global assets.
Further information on the pattern of total wealth ownership across regions and countries during the year to mid-2013 can be found in the full publication: Credit Suisse Global Wealth Report 2013.