The 2013 Credit Suisse Global Wealth Report shows that global wealth has more than doubled since 2000, reaching a new all-time high of $241 trillion. Although wealth is one of the pillars of the economic system, reliable data on personal wealth ownership is in short supply. The Global Wealth Report aims to help bridge this deficit by providing the most comprehensive, reliable and timely source of information on global household wealth, covering all regions and countries, and all parts of the wealth spectrum from rich to poor. An excerpt of the report follows below, and the entire version is available for download here.
Despite the continuing challenges posed by the economic environment, the underlying factors this year have been broadly positive for global household wealth. For the world as a whole, we estimate that personal wealth increased by 4.9 percent during the year to mid-2013 and now totals $241 trillion. Aggregate total wealth passed the pre-crisis peak in 2010, and since then has set new highs every year. Average wealth also established a new high at $51,600 per adult, the first time that average global wealth has passed the $50,000 threshold since 2007.
Michael O’Sullivan, Credit Suisse’s Chief Investment Officer for the U.K., Eastern Europe, the Middle East and Africa discusses the Global Wealth Report.
A Tale of Two Countries: The United States and Japan
Looking in more detail at the global pattern, the story this year is a tale of two countries. The United States posted a fifth successive year of rises in personal wealth. Fueled by a recovery in house prices and a bull equity market which drove the Dow Jones to new highs, the United States added $8.1 trillion to the global wealth stock, increasing wealth ownership by 12.7 percent to $72.1 trillion. This is 20 percent more than the pre-crisis high in 2006 and 54 percent above the recent low in 2008.
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Aggressive monetary policy by the Bank of Japan (BOJ) spurred an even greater rise in equity prices – up 52 percent in the year to mid-2013. But equity holdings in Japan are very low by international standards, accounting for less than 10 percent of household financial wealth, and the same aggressive BOJ policies drove the yen-USD exchange rate down by 22 percent. As a consequence, total household wealth in Japan has fallen by $5.8 trillion this year, equivalent to 20 percent of Japanese net worth. Japan suffered very little during the global financial crisis – in fact, personal wealth grew by 21 percent between 2007 and 2008. However, in marked contrast to recent performance by the United States, total wealth is now just 1 percent above the 2008 level. In most other parts of the world, the economic environment has been generally favorable to wealth acquisition.
Winners and Losers Among Countries
The extent to which the United States and Japan dominate the world picture this year is illustrated by the chart below, which shows the countries with the largest total wealth gains and losses. China ($1.4 trillion), Germany ($1.2 trillion) and France ($1.1 trillion) are the only other countries where the change in wealth exceeded $1 trillion. Total wealth changed in a further eight countries by more than $200 billion (all gains): Italy, the United Kingdom, Spain, Mexico, Sweden, India, Korea and Canada. The equity price increase and the slightly favorable euro-dollar movement enabled the euro-zone countries to recover more than half of the very large wealth loss experienced 12 months earlier. The United Kingdom, India and Switzerland also managed to recover a significant portion of recent losses.
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Wealth Per Adult Across Countries: Switzerland Remains On Top
As already noted, global household wealth equates to $51,600 per adult, a new all-time high for average net worth. This average global value masks considerable variation across countries and regions, as is evident in the chart below. The richest nations, with wealth per adult of more than $100,000, are found in North America, Western Europe, and among the rich Asia-Pacific and Middle Eastern countries. They are headed by Switzerland, which in 2011 became the first country in which average wealth exceeded $500,000. It dropped below this mark in 2012, but this year equity price rises resulted in a new peak value of $513,000 per adult. Australia ($403,000), Norway ($380,000) and Luxembourg ($315,000) all experienced an increase in wealth per adult and retain their respective second, third and fourth places from 2012. The United States, Sweden, France, Singapore, Belgium and Denmark are close behind, with average wealth per adult in the $250,000 to $300,000 range. A year ago, Japan moved up to fourth place in the table, but it has now been demoted and no longer ranks among the top ten countries.
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Distribution of Wealth Across Individuals: Inequality Remains High
To determine how global wealth is distributed across households and individuals – rather than regions or countries – we combine our data on the level of household wealth across countries with information on the pattern of wealth distribution within countries. Our estimates for mid-2013 indicate that once debts have been subtracted, an adult requires just $4,000 in assets to be in the wealthiest half of world citizens. However, a person needs at least $75,000 to be a member of the top 10 percent of global wealth holders, and $753,000 to belong to the top 1 percent. Taken together, the bottom half of the global population own less than 1 percent of total wealth. In sharp contrast, the richest 10 percent hold 86 percent of the world’s wealth, and the top 1 percent alone account for 46 percent of global assets.
The Tokyo skyline, with Mount Fuji in the background, courtesy of Shutterstock.com.