Global Wealth in 2015: Underlying Trends Remain Positive
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Global Wealth in 2015: Underlying Trends Remain Positive

Global wealth somewhat dropped in 2015 due to the strong US dollar, according to the "Global Wealth Report 2015." The underlying situation nevertheless remains positive, though wealth inequalities have continued to widen.

Global wealth reached 250 trillion US dollars in 2015, slightly less than a year earlier, due to adverse exchange rate movements. The underlying wealth trends do, however, generally remain positive, according to the Credit Suisse Research Institute's annual "Global Wealth Report." The rise in household wealth was particularly strong in the US and China between mid-2014 to mid-2015. "Wealth is (nevertheless) still predominantly concentrated in Europe and the United States. However, the growth of wealth in emerging markets has been most impressive, including a fivefold rise in China since the beginning of the century," said Credit Suisse CEO Tidjane Thiam. China now accounts for a fifth of the world population, while holding nearly 10 percent of the global wealth. The Chinese middle class is now, for the first time, the world's largest.

Central Role of the Expanding Middle Class

This century, the wealth of the middle class has grown strongly in all regions and in almost all countries. Throughout the world, the size, health and resources of the middle class are seen as key factors in determining the speed and sustainability of economic development. It is often at the heart of political movements and new consumption trends, and a major source of the business people and entrepreneurs who aim to satisfy new demands. For a variety of reasons, the US middle class has come to epitomize the middle class. But this year, the Chinese middle class for the first time outnumbered it. The Chinese middle class now counts 109 million adults, well ahead of the 92 million adults part of the American middle class. Globally, 14 percent of the adult population belonged to the middle class in 2015 – 664 million adults in total. (See figure) This year, middle class wealth did, however, grow at a slower pace than wealth at the top end. "Still, the middle class will continue to expand in emerging economies overall, with a lion's share of that growth to occur in Asia. As a result, we will see changing consumption patterns as well as societal changes as, historically, the middle class has acted as an agent of stability and prosperity," Thiam stressed. The Global Wealth Report defines the middle class in terms of a wealth band rather than an income range, in order to be resilient to temporary setbacks such as a spell of unemployment.

The middle class per country (in million adults)

The middle class per country (in million adults)

Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2015

Wealth Inequality Continues to Widen

Wealth inequality has widened in the aftermath of the financial crisis and this year was no exception. This year's rise in equity prices and in the size of financial assets in high-wealth countries pushed up the wealth of some of the richest countries and people, resulting in increased wealth inequality. The top percentile of wealth holders now own just over half of the world's wealth and the richest decile 87.7 percent. "While the distribution of wealth is skewed towards the wealthy, the considerable economic importance of the base and middle sections (of the wealth pyramid) should not be overlooked. Together, they account for 39 trillion US dollars in wealth, driving a significant part of demand for a wide range of consumer goods and financial services," Thiam underlined. To be part of the wealthiest half of the world's adult population, you need 3,210 dollars once debts have been subtracted. (See figure) To be a member of the world's wealthiest 10 percent you need 68,800 dollars and to be among the richest percentile, 759,900 dollars.

World's wealth levels in 2015

World's wealth levels in 2015

Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2015

Millions of New Millionaires Likely to Emerge as Global Wealth Is Set to Continue to Grow

Global wealth is likely to continue grow at an annual rate of 6.5 percent in the coming years, reaching 345 trillion US dollars in 2020, 38 percent above the current level of wealth. The US will remain the undisputed leader in terms of wealth, holding nearly a third of the global total. The main drivers behind the continued wealth growth are, however, located in the emerging economies. (See figure) Their share of the global wealth could rise to 19 percent by 2020, from 17 percent today. Both China and India are likely to post annual growth rates above 9 percent in the five coming years. They have together managed to double their share of global wealth to 10.5 percent over the past 15 years. Chinese wealth growth has been particularly strong: In 2000, the size of Chinese wealth was similar to that of the US back in 1939. Fifteen years later, Chinese wealth stood at the level the US had reached in 1972 (33 years later!) and the wealth of the country's households could well continue to leapfrog the growth rates of developed economies. As a result, the number of Chinese dollar millionaires is expected to reach 2.3 million by 2020, a 74 percent increase compared to today. Globally the number of dollar millionaires is set to soar by 46 percent over the next five years, to a total of 49.3 million adults with 22 million of these living in North America, 15.5 million in Europe and 8 million in Asia Pacific (excluding China and India) – an additional 15.5 million dollar millionaires in just 5 years. To put this figure in perspective, this group of dollar millionaires will still only account for 0.7 percent of the world's adult population.

Evolution of the wealth share in emerging markets

Evolution of the wealth share in emerging markets

Source: Credit Suisse