Global wealth sees first decline since 2008, but India bucks trend

India, along with Russia, Mexico, and Brazil, saw among the biggest increases in household wealth last year, a survey released by Credit Suisse and UBS showed.

In contrast, global wealth – measured in current nominal US dollars – declined for the first time since the 2008 financial crisis on the reduced value of financial assets, a stronger US dollar, and elevated inflation, the annual Global Wealth Report said.

Current nominal US dollars is the value of money without adjusting for inflation or changes in purchasing power.

The report estimates that household wealth in India rose 4.6%, or by $675 billion, from the previous year to $15.365 trillion by the end of 2022. In value terms, Brazil saw the biggest jump in household wealth at $1.1 trillion, while in Mexico it rose by $655 billion and in Russia by $600 billion.

Rich countries in North America and Europe shed about $10.9 trillion, while countries in the Asia-Pacific saw losses of $2.1 trillion, the study said.

Nations in Latin America were the outliers, with a total wealth accretion of $2.4 trillion, buoyed by an average 6% currency appreciation against the US dollar, the study showed.

The US lost the most wealth, followed by Japan, China, Canada, and Australia, the study showed. On a per adult basis, Norway, Singapore, and the United Arab Emirates stood out with higher increases of average private wealth.

“Financial assets contributed most to wealth declines, while non-financial assets (especially real estate) stayed resilient, despite rapidly rising interest rates. But the relative contributions of financial and non-financial assets may reverse in 2023 if house prices decline in response to higher interest rates,” Anthony Shorrocks, economist and author of the report, said.

While global average wealth per adult declined by 3.6%, or by $3,198, to $84,718, in India, it rose 2.8% from the previous year to $16,500.

Switzerland continued to top the wealth per adult category, followed by the US, Hong Kong, Australia and Denmark despite sizeable reductions in mean wealth when compared with the previous year.

Ranking markets by median wealth puts Belgium in the lead followed by Australia, Hong Kong, New Zealand, and Denmark.

Mean wealth represents the average wealth per adult in a country and can be skewed by extreme values, while median wealth indicates the middle value when all adults are arranged by their wealth, and therefore may give a more realistic picture.

Global wealth per adult is expected to reach $110,270 in 2027, with the number of millionaires at 86 million and the number of ultra-high-net-worth individuals – those with wealth above $50 million – at 372,000,” Nannette Hechler-Fayd’herbe, chief investment officer for the EMEA region and global head of economics and research at Credit Suisse, said in the report.

Emerging markets are likely to drive global wealth, which is expected to jump by nearly 38% to $629 trillion in the next five years from $454.4 trillion at the end of 2022, the study said. The latest survey took into account the wealth of 5.4 billion adults across 200 regions.

Household wealth had grown at a record pace in 2021 during the Covid era as macroeconomic activity recovered in a low-interest environment. The aid given to households by governments in advanced countries, the 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, the study said.