One million dollars is no longer a member of the richest 1% club – Credit Suisse

0

A million dollar net worth is no longer enough to get you to join the world’s top 1% by wealth club.

Despite the worst health crisis in at least a century that plunged most of the world’s economies into recession, global wealth rose 7.4% in 2020 to around $ 418.3 trillion, according to Credit Suisse Global Wealth Report 2021 published on June 22. The increase was fueled by rising asset prices that surged after the initial shock of the COVID-19 pandemic, and a weaker US dollar. The depreciation of the dollar last year alone added 3.3% to global wealth.

“Wealth creation in 2020 appears to have been completely detached from the economic hardships resulting from COVID-19,” said Anthony Shorrocks, consultant for Credit Suisse and author of the report. The pandemic had an acute short-term impact on global markets, but it reversed at the end of June 2020.

Global governments have opened stimulus taps and central banks have pushed interest rates to record highs to counter the economic drag from the pandemic. Several countries, including Australia and developing Asian economies, have used quantitative easing for the first time, causing stock markets and house prices to soar in many parts of the world.

If asset price increases are put aside, global household wealth may have declined in 2020, Shorrocks said, noting that in lower brackets where financial assets are less prevalent, wealth has tended to stop. or even to regress. Some of the underlying factors may self-correct over time. “For example, interest rates will start to rise again at some point, which will dampen asset prices,” he said.

If exchange rates had remained stable, total world wealth would have increased by 4.1% and wealth per adult by 2.7% last year. Wealth per adult rose 6% in 2020 to $ 79,952 after initially falling 4.7% due to the pandemic drag.

By region, total wealth increased by $ 12.4 trillion in North America and $ 92 trillion in Europe last year. China added an additional $ 4.2 trillion. However, India and Latin America both recorded losses in 2020. Total wealth fell 4.4% in India and the loss was amplified by the depreciation of the exchange rate, according to the report.

The number of millionaires in the world increased by 5.2 million to reach 56.1 million. As a result, an adult must now be worth over $ 1 million to belong to the world’s richest 1% group, up from $ 988,103 in 2019. “So 2020 marks the year when, for the first time, more of 1 the world’s adults are in nominal terms dollar millionaires, ”according to the report.

Global wealth is expected to increase by 39% to reach $ 583 trillion by 2025, according to Credit Suisse projections. Emerging economies, or low and middle income countries, are expected to contribute 42% of growth, while they only constituted 33% of wealth in 2020.

Within emerging economies, China and India are expected to be the main contributors. China was the first major global economy to be affected and recover from the COVID-19 pandemic, while India is still emerging from a deadly wave of COVID-19 and struggling to vaccinate its 1.3 billion inhabitants.

Over the next five years, 28 million millionaires are expected to be added worldwide, bringing the total to 84 million. The United States is expected to add 6.1 million new millionaires, followed by China with 4.9 million and Japan with 1.7 million. The number of very high net worth individuals, defined as those with more than $ 50 million in assets, is expected to increase by 25,000 each year on average, for a total of around 129,000 over the next five years, according to the report. .

Share.

About Author

Comments are closed.