Global Wealth Faces First Decline Since 2008 Financial Crisis

Credit Suisse and UBS Jointly Release 2022 Global Wealth Report

Global wealth experienced an unprecedented decline of 2.4% in 2022, marking the first decrease since the 2008 financial crisis. The 14^th Global Wealth Report, a collaborative effort between Credit Suisse and UBS, revealed that the total global wealth dropped to $454.4 trillion last year. This decline was predominantly attributed to a substantial decrease in investment assets.

Wealth Per Adult Sees Drop, Inequality Declines

In tandem with the decline in global wealth, the report highlighted a 3.6% reduction in wealth per adult globally, reaching $84,718. Amidst these challenging figures, a silver lining emerged as wealth inequality also showed signs of abating. The report showcased a decrease in the wealth share of the global top 1%, which fell from 45.6% to 44.5%. This shift was largely driven by the losses incurred by the wealthiest individuals in the backdrop of tumbling stock and bond markets. In contrast, global median wealth, a more accurate representation of an average individual’s financial situation, experienced a positive trajectory, increasing by 3% to reach $9,167 per adult.

Millionaires’ Count and The Global Wealth Report

The report indicated a decline in the count of millionaires, measured in U.S. dollar terms, by 3.5 million, bringing the total to 59.4 million. However, this number doesn’t account for the 4.4 million individuals whose wealth crossed the $1 million mark due to inflation. Spanning approximately 200 countries and encompassing individuals ranging from blue-collar workers to billionaires, the Global Wealth Report’s 2022 edition offered insights into the wealth of around 5.4 billion adults. It is noteworthy that this report, a fixture conducted solely by Credit Suisse until now, was conducted jointly with UBS post the latter’s acquisition of Credit Suisse.

Insights into Global Private Wealth and the Shifting Economic Landscape

The primary objective of this meticulous research, regarded as one of the most comprehensive of its kind, is to provide insights into the landscape of global private wealth. Paul Donovan, Chief Economist of UBS Global Wealth Management, emphasized the significance of these insights, especially in light of the evolving global economy that’s increasingly considering sustainability and equity alongside material aspirations. Donovan underscored the pivotal moment the world is currently navigating, characterized by profound structural changes.

Impact of Market Fluctuations and Regional Disparities

The dynamics of global wealth are molded by a convergence of factors, including fluctuations in prices, currency valuations, inflation rates, and interest levels. The most substantial influence on global wealth in 2022 was the staggering 6.8 drop in global stock and bond markets, resulting in a staggering $19 trillion loss. The impact of this decline was particularly pronounced in North America and Europe, which collectively witnessed a staggering loss of $10.9 trillion. Leading the list of countries affected by these losses was the U.S., home to the largest population of ultra-rich individuals. Following suit were Japan, China, Canada, and Australia.

Rise of Middle-Income Countries and Projections for the Future

Interestingly, the report shed light on the ascent of middle-income countries, with Latin America witnessing a 2.4% surge in wealth attributed to both currency gains and robust economic growth. Despite the challenges posed by market volatility and inflation, the Global Wealth Report presented an optimistic outlook for the next five years. It projected a robust 38% increase in global wealth, amounting to a staggering $629 trillion by 2027. This growth trajectory is expected to be primarily fueled by a rapid expansion of wealth in emerging economies, contributing significantly to the drive for equity in wealth distribution.

The Global Wealth Report paints a picture of shifting dynamics in global wealth. The future trajectory of global wealth remains uncertain as various factors continue to shape this intricate tapestry of financial prosperity.