The world is richer than ever, despite a global economic slowdown and rising trade tensions over the last 12 months, according to a report by Credit Suisse.
And while the gap between rich and poor countries is narrowing, the world’s most affluent people still control the lion’s share of global wealth, the Swiss bank’s Global Wealth Report 2019 showed.
The United States and China were the two largest contributors to the 2.6 percent rise in global wealth to $360 trillion over the past year.
Globally, the amount of wealth per adult reached a record high of $70,850 in mid-2019, Credit Suisse said.
The bank defines a person’s wealth as the sum total of his or her financial assets and non-financial assets – mostly comprised of housing – minus the person’s total debt.
Switzerland remains the region with the world’s wealthiest people, averaging more than $560,000 in net assets per person. The country also recorded the biggest jump in the aggregate wealth of all its people, mainly because of a strengthening Swiss franc.
Hong Kong, despite falling into a recession following months of anti-government protests, came second after Switzerland in terms of wealth per person.
“Hong Kong is the only place where house prices rose faster than equity prices, and the only place where the share of the top one percent declined,” Credit Suisse said.
Wealth levels in the US, China, Japan, India and Brazil all increased.
But a sharp drop in the value of the Australian dollar saw people Down Under lose a staggering $28,670 in wealth per adult between mid-2018 and mid-2019. However, the country still has one of the highest levels of wealth per adult in the world.
China was a key contributor to the creation of wealth in the world.
For the first time, China surpassed the US to claim the biggest share of the global top 10 percent of wealthy individuals – defined as those with assets of at least $109,403. Credit Suisse’s survey showed there are 100 million Chinese in that top rank, compared with 99 million Americans.
And in terms of total wealth, China now ranks second behind the US, overtaking Japan as property prices there soar.
“China’s progress has enabled it to replace Europe as the principal source of global wealth growth and to replace Japan as the country with the second-largest number of millionaires,” Credit Suisse said.
Despite the overall growth, global wealth remains concentrated in the hands of the few richest people in the world. The lower half of the global population collectively owns less than one percent of the world’s net assets, while the top one percent owns about 44 percent of all wealth, Credit Suisse estimated.
While the gap between the world’s richest and poorest people has been widening, the inequality between countries has been shrinking over the past century, the bank said.
It said a key reason for this is that the growth in financial assets – such as cash, stocks and bonds – is slowing. Financial asset growth was a major reason for widening inequality after the 2008 financial crisis.
Meanwhile, an increase in non-financial assets – such as houses – is fuelling wealth creation in emerging economies. Non-financial assets accounted for the bulk of new wealth in China, Europe and Latin America, and almost all new wealth in Africa and India.
“While it is too early to say that wealth inequality is now in a downward phase, the prevailing evidence suggests that 2016 may have been the peak for the foreseeable future,” Credit Suisse said.
Another source of concern is rising debt levels. Globally, debts rose by four percent over the last year, Credit Suisse said.
“Our estimates indicate that household debt increased in all regions, and at a double-digit rate in China and India,” it added.