In a surprising turn of events, global household wealth faced a decline last year for the first time since the 2008 financial crisis. Factors such as inflation and the appreciation of the U.S. dollar resulted in a substantial loss of around $11.3 trillion in assets. However, while North American and European households bore the brunt of this setback, not all regions suffered a blow to their wealth.
We explore the recent global wealth report by Credit Suisse, exploring the reasons behind this decline, analyzing regions that witnessed growth, and offering insights into the future trajectory of global household wealth.
The annual global wealth report by Credit Suisse revealed a 2.4% decrease in total net private wealth worldwide, amounting to $454.4 trillion. The primary drop was predominantly observed in North American and European households, which together experienced a combined loss of $10.9 trillion. However, amidst challenging circumstances, the report surprisingly showed that Russia’s wealth increased during this period, adding 56 millionaires to its count, despite being impacted by sanctions.
Latin America emerged as a region witnessing a wealth increase of $2.4 trillion, largely attributed to an average 6% currency appreciation against the U.S. dollar. This factor played a significant role in countering the negative effects of inflation and currency depreciation in other regions. The research conducted for this report encompassed an estimated 5.4 billion adults worldwide, cutting across the entire wealth spectrum, providing a comprehensive understanding of the global wealth landscape.
Credit Suisse’s global head of economics and research, Nannette Hechler-Fayd’herbe, highlighted the resilience of wealth evolution during the COVID-19 era, with remarkable growth observed throughout 2021. However, due to inflation, rising interest rates, and currency depreciation, global household wealth experienced a reversal in 2022. Although this setback may have dampened current expectations, the report’s experts predict that it might primarily be a blip in the long-term trajectory of wealth growth.
The macro-economy contributed to a reduction in the number of millionaires by 3.5 million, bringing the global count to approximately 59.4 million individuals. Additionally, the percentage of wealth held by the top 1% richest individuals diminished, dropping to 44.5%. Despite these challenges, Credit Suisse’s experts anticipate a positive outlook for the future, projecting global wealth to increase by a staggering $629 trillion by 2027, representing a remarkable growth of 38%. Furthermore, the number of millionaires is predicted to reach 86 million by 2027, compared to around 60 million in 2022.
While global household wealth suffered a setback in 2022, primarily due to inflation, rising interest rates, and currency depreciation, there are promising prospects on the horizon. The comprehensive global wealth report by Credit Suisse sheds light on the varying impacts across different regions and provides valuable insights into the future trajectory of wealth growth. As the global economy rebounds and the adverse effects of recent challenges diminish, the stage is set for a potential resurgence in global wealth, paving the way for increased prosperity and opportunities for millions across the world.
Market Capital Research 