Global household wealth saw record growth in 2021, according to the 13th Global Wealth Report published by the bank Credit Suisse, but inflation and the fall in the financial markets are likely to change the trend in 2022.
$463.6 trillion in global household wealth
2021 was a banner year for household wealth due to the general rise in equity prices and the favorable environment created by the measures taken in 2020 by central banks to reduce interest rates, which however generated inflationary pressures.
With the stock market soaring in 2021, household wealth increased at a steady pace to total 463.6 trillion dollars (462.095 billion euros), up 9.8% compared to the previous year, according to an estimate of the bank which publishes an annual report on the evolution of the fortunes of individuals.
The amounts for this study are always expressed in dollars in order to facilitate comparisons from one country to another. But the sharp rise in the greenback has repercussions on its estimates, explains the bank, which specifies that once corrected for the effects of exchange rates, the rise for the past year amounts to 12.7%, i.e. the annual growth rate “ highest ever recorded« .
« It is generally assumed that significant increases in GDP associated with strong stock and housing markets lead to significant wealth gains at the national level, and this has certainly been the case in 2021.“, says the study. In the United States, the stock of household wealth increased by $19.5 trillion. This increase was much higher than that experienced by China (11.2 trillion dollars), which came in second place, which itself far exceeded the increases recorded in Canada (1.8 trillion dollars), India (1.5 trillion of dollars) and in Australia (1.4 trillion dollars).
Global wealth is created mainly in North America and China
All regions of the world contributed to the rise in global wealth, but North America and China were the biggest contributors, with North America responsible for just over half of the increase and China by a quarter. In contrast, Africa, Europe, India and Latin America together accounted for only 11.1% of global wealth growth. This low figure reflects widespread depreciation against the US dollar in these regions. By percentage, North America and China recorded the highest growth figures (around 15% each), while Europe’s 1.5% growth was the lowest of all regions, and by far.
Total household debt increased by 4.4% worldwide. However, the global value was dragged down by flat growth in the Asia-Pacific region (excluding China and India) and debt reduction in Europe (due to exchange rate depreciation). Elsewhere, household debt rose by an average of 9%, with China rising 12.1%.
In the United States, African-American and Hispanic households benefit from the rise in real estate prices
An examination of particular population subgroups suggests that in the United States and Canada it is the Millennials and Generation X who increased their wealth the most between 2019 and 2022. In the United States, the wealth of African American and Hispanic households saw the largest percentage increase in 2021, thanks to a non-financial wealth, mainly in the form of housing. When it comes to women’s wealth, it is estimated that of the 26 countries that account for 59% of the world’s adult population, 15 countries (including China, Germany and India, for example) have seen a decline in women’s wealth between 2020 and 2021. For other countries (including the United States and the United Kingdom, for example), the average ratio of women’s to men’s wealth has increased.
62.5 million US dollar millionaires
The wealth share of the world’s top 1% rose for the second straight year to 45.6% in 2021, from 43.9% in 2019. The US Dollar Millionaires Club hosted 5, 2 million additional members in 2021, and their total number reached 62.5 million people worldwide by the end of the year. This 9% growth is slightly higher than the 8.4% increase in wealth per adult, but falls short of the 9.5% increase in average wealth. The number of Ultra High Net Worth (UHNW) people grew at a much faster rate and grew by 21% in 2021. The number of UHNW people grew the most in the United States (30,470), followed by China (5200). The number of UHNW people also increased by more than a thousand in Germany (1750), Canada (1610) and Australia (1350). Relatively few countries have seen a decline in the number of people HNW. The largest declines were recorded in Switzerland (minus 120), Hong Kong SAR (minus 130), Turkey (minus 330) and the United Kingdom (minus 1130).
Inflation, falling asset prices and the war in Ukraine are likely to hamper the trend
In 2022, asset prices have already fallen and a reversal of the 2021 trend is to be expected. Importantly, a detailed analysis of average wealth within countries and across the world shows that wealth inequality has declined this century due to accelerating growth in emerging markets. Global average wealth has grown about twice as fast as global wealth per adult and much faster than global GDP. The average household has thus been able to increase its wealth over the past two decades.
Household wealth could increase by 28% by 2026
Global inflation and the war between Russia and Ukraine are likely to hamper real wealth creation over the next few years. Nevertheless, global wealth in nominal US dollars is projected to increase by $169 trillion by 2026, an increase of 36%. Low- and middle-income countries currently account for 24% of wealth, but will be responsible for 42% of wealth growth over the next five years. Middle-income countries will be the main driver of global trends. Global wealth per adult is expected to increase by 28% by 2026 and cross the USD 100,000 threshold in 2024. The number of millionaires is also expected to increase significantly over the next five years, to 87 million, while that of UHNWIs will rise to 385,000.