In a surprising turn of events, global wealth has declined for the first time since the 2008 financial crisis. Swiss banks UBS and Credit Suisse reveal in their joint Global Wealth Report 2023 that at nominal exchange rates, worldwide private wealth decreased by $11.3 trillion to $454.4 trillion by the end of the previous year.
This downturn was heavily influenced by the appreciation of the US dollar against various currencies, causing a 5.8% dip in global wealth. Wealth per adult also saw a 3.6% drop to $84,718. This stark reduction is mostly attributed to the banks’ focus on the household wealth of 5.4 billion people.
The report notes that financial assets were the primary contributors to the wealth decline in the previous year. Non-financial assets, such as property, remained relatively resilient despite the rapid increase in interest rates.
Economists Anthony Shorrocks and James Davies, authors of the report, acknowledge that global wealth exhibited resilience throughout the Covid-19 pandemic era, recording substantial growth in 2021. However, factors such as inflation, rising interest rates, and currency depreciation contributed to the reversal in 2022.
The decline in global wealth was concentrated in regions such as North America and Europe, which lost a combined $10.9 trillion. Asia Pacific experienced a loss of $2.1 trillion, while Latin America surprisingly gained $2.4 trillion, aided by a 6% average currency appreciation against the US dollar.
The US topped the list of wealth loss, with $5.9 trillion in 2022, followed by Japan, China, Canada, and Australia. Meanwhile, Russia, Mexico, India, and Brazil saw the largest increases.
Despite these challenges, the report predicts a 38% rise in global wealth over the next five years, reaching $629 trillion by 2027. Middle-income countries are expected to drive this growth, resulting in an estimated wealth per adult of $110,270 and a projected 86 million millionaires worldwide.
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