Wealth creation in 2020 was largely immune to the challenges facing the world due to the actions taken by governments and central banks to mitigate the economic impact of COVID-19. Total global wealth grew by 7.4% and wealth per adult rose by 6% to reach another record high of USD 79,952. Overall, the countries most affected by the pandemic have not fared worse in terms of wealth creation.
The pandemic had a profound short-term impact on global markets in the first quarter of 2020. The report estimates that USD 17.5 trillion was lost from total global household wealth between January and March 2020, equivalent to a fall of 4.4%. This was largely reversed by the end of June. Surprisingly, in the second half of 2020 share prices continued on an upward path, reaching record levels by the end of the year. Housing markets also benefitted from the prevailing optimism as house prices rose at rates not seen for many years. The net result was that USD 28.7 trillion was added to global household wealth during the year.
Key highlights
Global wealth levels 2020
Wealth distribution 2020
Wealth differences between adults widened in 2020. The global number of millionaires expanded by 5.2 million to reach 56.1 million. As a result, an adult now needs more than USD 1 million to belong to the global top 1%. A year ago, the requirement for a top 1% membership was USD 988,103. So, 2020 marks the year when for the first time, more than one percent of all global adults are in nominal terms dollar millionaires. The ultra high net worth (UHNW) group grew even faster, adding 24% more members, the highest rate of increase since 2003. Since 2000, people with wealth in the range of USD 10,000-100,000, have seen the biggest rise in numbers, more than trebling in size from 507 million in 2000 to 1.7 billion in mid-2020. This reflects the growing prosperity of emerging economies, especially China, and the expansion of the middle class in the developing world.
Wealth outlook 2020-25
Global wealth is projected to rise by 39% over the next five years, reaching USD 583 trillion by 2025. Low and middle-income countries are responsible for 42% of the growth, although they account for just 33% of current wealth. Wealth per adult is projected to increase by 31%, passing the mark of USD 100,000. Unadjusted for inflation, the number of millionaires will also grow markedly over the next five years reaching 84 million, while the number of UHNWIs should reach 344,000.
Anthony Shorrocks, economist and report author, said: 'The pandemic had an acute short term impact on global markets but this was largely reversed by the end of June 2020. As we noted last year, global wealth not only held steady in the face of such turmoil but in fact rapidly increased in the second half of the year. Indeed wealth creation in 2020 appears to have been completely detached from the economic woes resulting from COVID-19. If asset price increases are set aside, then global household wealth may well have fallen. In the lower wealth bands where financial assets are less prevalent, wealth has tended to stand still, or, in many cases, regressed. Some of the underlying factors may self-correct over time. For example, interest rates will begin to rise again at some point, and this will dampen asset prices.'
Nannette Hechler-Fayd'herbe, Chief Investment Officer International Wealth Management and Global Head of Economics & Research at Credit Suisse, said: 'There is no denying actions taken by governments and central banks to organize massive income transfer programs to support the individuals and businesses most adversely affected by the pandemic, and by lowering interest rates, have successfully averted a full scale global crisis.
'Although successful, these interventions have come at a great cost. Public debt relative to GDP has risen throughout the world by 20 percentage points or more in many countries. Generous payments from the public sector to households have meant that disposable household income has been relatively stable and has even risen in some countries. Coupled with restricted consumption, household saving has surged inflating household financial assets and lowering debts. The lowering of interest rates by central banks has probably had the greatest impact. It is a major reason why share prices and house prices have flourished, and these translate directly into our valuations of household wealth.'
The Global Wealth Report 2021 is available at:
https://www.credit-suisse.com/ch/en/about-us/research/research-institute.html
About the Credit Suisse Research Institute
The Credit Suisse Research Institute is Credit Suisse's in-house think tank. The Institute was established in the aftermath of the 2008 financial crisis with the objective of studying long-term economic developments, which have - or promise to have - a global impact within and beyond the financial services. Further information about the Credit Suisse Research Institute can be found at www.credit-suisse.com/researchinstitute.
Credit Suisse
Credit Suisse is one of the world's leading financial services providers. Our strategy builds on Credit Suisse's core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. Credit Suisse employs approximately 49,090 people. The registered shares (CSGN) of Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com .
Disclaimer
This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.
Attachments
Disclaimer
Credit Suisse Group AG published this content on 22 June 2021 and is solely responsible for the information contained therein. Distributed by Public , unedited and unaltered, on 22 June 2021 09:06:03 UTC.