The 15th annual Global Wealth Report also predicts 38% increase in global wealth by 2027
The past year has been challenging for global wealth with economic conditions and uncertainty in both markets and consumers having a negative impact. But things are set to improve.
Canadians faced some of the heaviest losses in wealth in 2022 but will see recovery in the years ahead, including a sharp rise in the number of millionaires.
The 15th annual Global Wealth Report from UBS and Credit Suisse shows that private net wealth decreased by $11.3 trillion in current nominal US dollars, or 2.4%, to $454.4 trillion at the end of 2022 while wealth per adult dropped by $3,198, or 3.6%, to just short of $85K. Median net wealth gained 3%.
The report reveals that much of the decline last year was due to US dollar appreciation against many other currencies, with financial assets contributing the most to declines compared to non-financial assets, mostly real estate, despite rising interest rates.
“If exchange rates were held constant at 2021 rates, then total wealth would have increased by 3.4% and wealth per adult by 2.2% during 2022,” explained Anthony Shorrocks, economist and report author. “This is still the slowest increase of wealth at constant exchange rates since 2008. Keeping exchange rates constant but counting the effects of inflation results in a real wealth loss of –2.6% in 2022.”
North America and other wealthier regions (Europe for example) suffered the greatest declines in global wealth last year with the US topping the list of losses in market terms followed by Japan, China, Canada, and Australia.
Generation X and Millennials continued to do relatively well in 2022 in the US and Canada but were not immune to the overall wealth reduction.
Canada vs. US
Total assets in the US declined 8.4% while Canada’s decline was 9.9% and unlike the US, both financial and non-financial assets fell in Canada - by 6.5% and 10.4% respectively.
Here’s how Canada compared with the US in 2022 on some other key metrics (in US dollars):
Median wealth per adult (USD): Canada: $137,633 US: $107,739
Total wealth (UDS): Canada: $11 trillion US: $140 trillion
US dollar millionaires: Canada: 2,032,000 US: 22,710,000
Top 10% of global wealth holders: Canada: 15,237 US: 110,219
Top 1% of global wealth holders: Canada: 1,802 US: 21,037
Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Global Wealth Databook 2023
Improving outlook
The report predicts that the next five years will see a 38% surge in global wealth to US$629 trillion, with Growth by middle-income markets will be the primary driver of global trends.
Canada will see a significant increase in its millionaire population, which is just above 2 million currently, but set for a 63% surge by 2027 to more than 3.3 million. While the US has significantly more (almost 23 million) millionaires and will continue to do so, it is predicted to see an increase of just 16%.
