Global Wealth Report 2022 – Record Wealth Growth In 2021 Tapered by Challenging 2022 Market Environment

Wealth grew at a strong pace in 2021 and by year-end, global wealth at prevailing exchange rates totaled USD 463.6 trillion, a gain of 9.8%. Wealth per adult rose 8.4% to USD 87,489. Setting aside exchange rate movements, aggregate global wealth grew by 12.7% in 2021, which is the fastest annual rate ever recorded. However, factors such as inflation, rising interest rates, and declining asset price trends could reverse last year’s impressive growth in 2022.

2021 was a bumper year for household wealth driven by widespread gains in share prices and a favorable environment created by central bank policies in 2020 to lower interest rates, but at the cost of inflationary pressures. Rises in interest rates in 2022 have already had an adverse impact on bond and share prices and are also likely to hamper investment in non-financial assets. Inflation and higher interest rates could slow household wealth growth in the near term even if nominal gross domestic product (GDP) rises at the relatively rapid pace predicted for this year.

Key highlights

• Aggregate global wealth totaled USD 463.6 trillion at the end of the year, a rise of USD 41.5 trillion or 9.8%. Wealth per adult was up 8.4% to reach USD 87,489 at year-end. These amounts are reduced because they refer to US dollars at current exchange rates, and the US dollar appreciated during the year. If exchange rates had remained the same as in 2020, total wealth would have grown by 12.7% and wealth per adult by 11.3%.
• Accounting for inflation lowers the wealth growth rates. In 2021, the estimated increase in real wealth was +8.2%. As we look ahead toward a period of more elevated inflation than in the past two decades, the comparison of real and nominal wealth trends grows in relevance.
• All regions contributed to the rise in global wealth, but North America and China dominated, with North America accounting for a little over half the global total and China adding another quarter. In contrast, Africa, Europe, India and Latin America together accounted for just 11.1% of global wealth growth. This low figure reflects widespread depreciation against the US dollar in these regions. In percentage terms, North America and China recorded the highest growth rates (around 15% each), while the 1.5% growth in Europe was by far the lowest among the regions.
• Total household debt increased by 4.4% for the world as a whole. However, the global figure was suppressed by zero growth for the Asia-Pacific region (excluding China and India) and the reduction in debt in Europe (due to exchange rate depreciation). Elsewhere, household debt rose on average by 9%, led by a rise of 12.1% in China.
• A look at specific population sub-groups suggests that, in the United States and Canada, Millennials and Generation X grew their wealth most between 2019 and 2022. In the United States, African American and Hispanic households saw the largest percentage increase in wealth in 2021 thanks to increases in non-financial wealth – mostly housing. With regard to women’s wealth, it is estimated that, of the 26 countries that make up 59% of global adult population, 15 countries (including China, Germany and India, for example) show a decline in the wealth of women over 2020 and 2021. For the remaining countries (including the United States and the United Kingdom, for example), the average ratio of women to men’s wealth increased.

Global wealth levels 2021

• The most significant development in 2021 was the widespread and sizable gains in share prices.
• Much of the year-on-year change in estimates of the household wealth of individual countries depends on asset prices and exchange rates. Among the countries covered in Figure 3 (G7 countries plus China, India and Russia), India led the way with a 31% rise, but France (28%), the United States (23%), Italy (23%) and Canada (22%) were not far behind. Elsewhere, share prices rose by more than 30% in Austria, Sweden, Saudi Arabia, Vietnam and Israel, and by more than 40% in Romania, Czechia and the UAE. In contrast, share prices fell by 2.2% in China, by 5%–6% in New Zealand, Chile and Pakistan, and by 17% in Hong Kong SAR.
• Exchange rate fluctuations are often the source of sizable gains and losses in wealth valued in US dollars. On average in 2021, countries depreciated against the US dollar by 2.9%. Among the countries covered in Figure 3, Japan (–9.3%) and the Eurozone (–7.7%) experienced the largest declines.
• Significant rises in GDP combined with vigorous equity and housing markets is highly likely to produce sizable wealth gains at the country level, and this was certainly the case in 2021. The United States added USD 19.5 trillion to its stock of household wealth. This is well above the second-place contribution of China (USD 11.2 trillion), which in turn far exceeds the rises recorded in Canada (USD 1.8 trillion), India (USD 1.5 trillion) and Australia (USD 1.4 trillion). In 2022, asset prices have fallen already and a tempering or partial reversal of the 2021 trend can be expected.

Wealth distribution 2021

The wealth share of the global top 1% rose for a second year running to reach 45.6% in 2021, up from 43.9% in 2019. US dollar millionaires gained 5.2 million extra members during 2021 and totaled 62.5 million worldwide at the year end. This 9% growth was slightly above the 8.4% increase recorded for wealth per adult, but fell short of the 9.5% rise in median wealth. The number of ultra-high-net-worth (UHNW) individuals expanded at a much faster rate, adding 21% new members in 2021. The United States (30,470) was the country that gained the most UNHW members, followed by China (5,200). UHNW membership also increased by more than a thousand in Germany (1,750), Canada (1,610) and Australia (1,350). Reductions in UHNW individuals were relatively uncommon. The biggest falls occurred in Switzerland (down 120), Hong Kong SAR (down 130), Turkey (down 330) and the United Kingdom (down 1,130).

An analysis of median wealth within countries and across the world shows that global wealth inequality has fallen this century due to faster growth achieved in emerging markets. Global median wealth has risen roughly twice as fast as global wealth per adult and much more rapidly than global GDP. The average household has thus been able to build up wealth over the last two decades.

Wealth outlook

Worldwide inflation and the Russia-Ukraine war are likely to hamper real wealth creation over the next few years. Nevertheless, global wealth in nominal US dollars is expected to increase by USD 169 trillion by 2026, a rise 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 primary driver of global trends. Global wealth per adult is forecast to rise 28% by 2026 and to pass the threshold of USD 100,000 in 2024. The number of millionaires will also grow markedly over the next five years to 87 million, while the number of UHNWIs will reach 385,000.

Axel Lehmann, Chairman of the Board of Directors of Credit Suisse Group AG and Chair of the Credit Suisse Research Institute, said: “We are very proud to present the thirteenth edition of our Global Wealth Report. As a leading wealth manager, it is a prerequisite for us to have a deep understanding of private wealth developments and share these with our stakeholders to help them navigate the future. As inflation is dominating the current investment discourse, this year’s study offers an additional assessment of real as opposed to nominal wealth trends to take account of the effect of inflation on global wealth.”

Anthony Shorrocks, economist and report author, said: “On a country basis, the United States added the most household wealth in 2021, followed by China, Canada, India and Australia. Wealth losses were less common and almost always associated with currency depreciation against the US dollar. Analysis of median wealth within countries and across the world shows that global wealth inequality has fallen this century due to faster growth achieved in emerging markets. The average household has thus been able to build up wealth over the last two decades.”

Nannette Hechler-Fayd’herbe, Chief Investment Officer for the EMEA region and Global Head of Economics & Research at Credit Suisse, said: “While some reversal of the exceptional wealth gains of 2021 is likely in 2022/2023 as several countries face slower growth or even recession, our five-year outlook is for wealth to continue growing. Higher inflation also yields higher forecast values for global wealth when expressed in current US dollars rather than real US dollars. Our forecast is that, by 2024, global wealth per adult should pass the USD 100,000 threshold and that the number of millionaires will exceed 87 million individuals over the next five years.”

Source: Credit Suisse