23 October 2020
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Global household wealth has proven resilient in the wake of the pandemic, showing a small increase in total wealth according to Credit Suisse's 2020 Global Wealth Report.
Thanks to government and central-bank actions to mitigate the Covid-19 fallout, global wealth rebounded from an initial slump in the first quarter of the year, adding $1trn by June after ending 2019 at $399.2trn. "Given the damage inflicted by Covid-19 on the global economy, it seems remarkable that household wealth has emerged relatively unscathed," said economist Anthony Shorrocks, one of the report's authors.
Without the pandemic, the best estimate of global wealth per adult would have risen from $77,309 at the start of the year to $78,376 at end-June 2020. Instead, the pandemic has caused average wealth to drop to $76,984.
Given the damage inflicted by Covid-19 on the global economy, it seems remarkable that household wealth has emerged relatively unscathed"
For the world as a whole, the report estimates that total mid-year global household wealth was $1trn above the January level, a rise of 0.25%. This is less than the rise in adult numbers over the same period, so average global wealth fell by 0.4% to USD 76,984. In comparison to what would have been expected before the Covid-19 outbreak, global wealth fell by $7.2trn, or $1,391 per adult worldwide.
The most adversely affected region was Latin America, where currency devaluations reinforced reductions in Gross Domestic Product (GDP) to result in a 12.8% reduction in total wealth in US dollar terms. The pandemic eradicated the expected growth in North America and caused losses in every other region, except China and India. Among the major global economies, the United Kingdom has seen the biggest relative erosion of wealth.
Wealth per adult slipped to an average $76,984 from $77,309 at the start of the year, the report found. Switzerland, the Netherlands, Taipei and Hong Kong saw gains, while Norway and the UK posted the biggest declines. The number of millionaires remained stable after soaring to 51.9 million last year, while the club of the ultra-high net worth individuals with more than $50m in net assets lost only 120 members to 175,570. In the US, which has the most people in the top 1% wealth group and 39% of the world's millionaires, the inequality gap has narrowed, according to the report.
Chief Investment Officer International Wealth Management and global head of Economics & Research at Credit Suisse, said: "Although 2019 was a year of incredible wealth creation, the Covid-19 pandemic has been a sobering reminder of the danger of exogenous shocks to the global economy. Unlike the financial crisis of 2007-08, there is reason for optimism this time around, as the global financial sector is much healthier than it was then. Governments and central banks have also learned the importance of credit arrangements and quantitative easing during a severe crisis.
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