The region saw the largest increase in wealth, but Europe and Asia Pacific also recorded gains while LatAm and India lost out
Global wealth grew by almost US$29 trillion in 2020 to reach $418 trillion.
That’s a 7.2% gain year-over-year in current US dollar terms, or 6% for each adult; although depreciation of the greenback impacted this and if the exchange rate had been the same as in 2019, gains would have been 4.1% for total wealth and 2.7% per adult.
The stats are part of the latest Global Wealth Report published this week by top 10 wealth manager Credit Suisse, which shows that households lost more than $17 trillion between January and March 2020 before markets rebounded and housing markets also soared in many countries.
North America led the pack for wealth creation in 2020, rising $12.4 trillion. Europe was next with $9.2 trillion, China added $4.2 trillion, and the rest of Asia Pacific gained $4.7 trillion.
However, 2020 was not a good year for wealth creation in Latin America and India, with both regions recording a loss. India saw wealth drop 4.4% and LatAm was down 11.4%.
The report reveals that, generally, those with equity portfolios fared better than those without. Homeowners have also largely benefitted.
“Wealth creation in 2020 appears to have been completely detached from the economic woes resulting from COVID-19,” noted Anthony Shorrocks, economist and report author. “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.”
Individuals in countries with income support programs have also suffered a smaller impact from job losses and reduced hours, while women have been more significantly affected than men overall, largely due to high representation among the most-impacted industries including hospitality and retail.
Top 1% now requires more wealth
The global number of millionaires expanded by 5.2 million to reach 56.1 million in 2020 and, as a result, an adult now needs more than US$1 million to belong to the global top 1% compared to $988.1K a year earlier.
Credit Suisse expects wealth growth of 39% to $583 trillion by 2025. Although low-to-middle-income countries will account for 42% of the growth, they account for only 33% of overall wealth.
On a per-adult basis, wealth is expected to grow by 31% to more than $100K.
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.
