Global Wealth Report 2023: exploring the fall in global household wealth
For the first time since 2008, global household wealth in US dollar terms decreased on aggregate as well as on a per adult basis, both in nominal and real terms. Wealth per adult also recorded the second-largest reduction since 2000.
The 3.4% household wealth growth in 2022 was the lowest rate recorded in any year this century apart from 2008. It was also the only year this century, other than 2008, in which the total value of household financial assets declined even when exchange rate changes are discounted. The key contributors to this situation were the reduced value of financial assets, a stronger US dollar and elevated inflation.
Wealth growth fluctuates with the pandemic
Wealth growth fluctuates with the pandemic
During the COVID-19 era, household wealth proved resilient and grew at a record pace during 2021, reinforced as macroeconomic activity recovered in a low-interest environment. This produced advantageous conditions for wealth growth, resulting in the most rapid rise recorded.
The financial support given to households by central governments in many advanced countries, coupled with lower interest rates and limitations on consumption opportunities, raised household savings and led to widespread increases in share and house prices. But inflation, rising interest rates and currency depreciation caused a reversal in 2022.
How has rising inflation affected global wealth?
How has rising inflation affected global wealth?
Global inflation forecasts, 2019-27 (%)
Fiscal and monetary policies undertaken in response to the COVID-19 pandemic, combined with the Russia-Ukraine war and other factors, have resulted in a rise in global inflation.
This persistent inflation has consequences for both global gross domestic product (GDP) and global wealth. In fact, in 2022 inflation reduced wealth growth by 6.0%, turning a nominal wealth gain of 3.4% into a real wealth loss of 2.6%.
Also, inflation reduced debt growth to roughly zero and increased the (negative) contribution of the reduced value of financial assets to –4.6% in 2022. And, while 2022 is expected to be the peak year for inflation, predicted future levels have been subject to a sequence of upward revisions.
How did exchange rates and financial assets affect global wealth in 2022?
How did exchange rates and financial assets affect global wealth in 2022?
Measured in current nominal US dollars, total net private wealth fell 2.4% to USD 454.4 trillion, while wealth per adult dropped 3.6% to USD 84,718 at end-2022.
Much of the 2022 decline in wealth came from the appreciation of the US dollar against many other currencies, which caused global wealth to decline by 5.8%. But this was offset by inflation, which raised nominal USD values by a similar amount.
If exchange rates are held constant at 2021 rates, then total wealth increased by 3.4% and wealth per adult by 2.2% during 2022. Nevertheless, the 3.4% growth in 2022 is the lowest rate recorded in any year this century except 2008.
Apart from exchange rate effects, financial assets were the main contributors to wealth declines in 2022. On the other hand, non-financial assets (mostly real estate) stayed resilient, despite rapidly rising interest rates. However, this may change in 2023 as generally higher interest rates take their toll on house prices.
A nuanced view of wealth change around the world
A nuanced view of wealth change around the world
Change in wealth per adult (USD), 2022 – biggest gains and losses
Wealth increases among countries were more common overall than wealth losses, but the gains were generally small in magnitude.
Rare exceptions included Russia, Mexico, India and Brazil, which all saw higher aggregate private wealth in 2022.
On a per adult basis, Norway, Singapore and the United Arab Emirates stood out with higher increases of average private wealth.
Interestingly, the countries that lost substantial wealth in 2022 were often those that made sizeable gains the year before.
The global wealth pyramid 2022
The global wealth pyramid 2022
The number of US dollar millionaires worldwide fell by 3.5 million during 2022 to total 59.4 million at year-end. This number includes 4.4 million "inflation millionaires1" who would no longer qualify if the millionaire threshold were adjusted for inflation during 2022.
The ultra-high-net-worth (UHNW) group with wealth above USD 50 million had 22,490 fewer members by our estimate.
The data shows that the rise in wealth inequality during the pandemic was reversed in 2022. This reduction can be traced to the relative decline in financial wealth during 2022. Over the longer term, global wealth inequality has fallen this century due to the faster growth achieved in emerging markets. Global median wealth has risen in tandem at roughly twice the pace of mean wealth.
A brighter outlook for global wealth
A brighter outlook for global wealth
According to our projections, global wealth will rise by 38% over the next five years, reaching USD 629 trillion by 2027. Growth by middle-income countries will be the primary driver of global trends. We estimate wealth per adult to reach USD 110,270 in 2027 and the number of millionaires to reach 86 million while the number of ultra-high-net-worth individuals is likely to rise to 372,000.
Read the full Global Wealth Report 2023
Read the full Global Wealth Report 2023
This year’s Global Wealth Report is brought to you jointly by Credit Suisse and UBS for the first time.
Over the years, the report has explored a wide range of macro and micro themes around the development of wealth. Now in its fourteenth edition, the Global Wealth Report covers estimates of the wealth holdings of 5.4 billion adults around the world and across the wealth spectrum.
