A record 2021 for household wealth:
By the end of 2021, global wealth totaled an estimated USD 463.6 trillion, which is an increase of 9.8% versus 2020 and far above the average annual +6.6% recorded since the beginning of the century. Setting aside exchange rate movements, aggregate global wealth grew by 12.7%, making it the fastest annual rate ever recorded. Wealth per adult continued rising to USD 87,489 at the end of 2021.
While financial assets have accounted for most of the increase in household wealth since the global financial crisis, the split between wealth increases driven by financial and non-financial assets was almost even in 2021. Accounting for inflation lowers the wealth growth rates. In 2021, we estimate the increase in real wealth to have been +8.2%. As we look ahead toward a period of more elevated inflation than in the past two decades, the comparison of real and nominal wealth trends grows in relevance.
On a country-by-country basis, the United States added the most household wealth in 2021, followed by China, Canada, India and Australia. Wealth losses were less common and almost always associated with currency depreciation against the US dollar, affecting for example Japan, Italy and Turkey. While Switzerland still ranks highest in terms of wealth per adult at USD 696,600, followed by the United States, Hong Kong SAR and Australia, the more relevant median wealth per adult criterion places Australia, Belgium and New Zealand in the top three positions with USD 273,900, USD 267,890 and USD 231,260, respectively.
A look at specific population sub-groups shows that, in the United States and Canada, Millennials and Generation X grew their wealth most between 2019 and 2022. In the United States, African American and Hispanic households saw the largest percentage increase in wealth (+22.2% and +19.9%, respectively) in 2021 thanks to increases in non-financial wealth – mostly housing. With regard to women’s wealth, it is estimated that, of the 26 countries that make up 59% of global adult population, 15 countries (including China, Germany and India, for example) show a decline in the wealth of women over 2020 and 2021. For the remaining countries (including the United States and the United Kingdom, for example), the average ratio of women’s to men’s wealth increased.
Global wealth distribution
The strong rise in financial assets resulted in an increase in inequality in 2021. However, when correlated with short-run asset price movements, such fluctuations in inequality prove transient. In 2022, asset prices have fallen already and a reversal of the 2021 trend can be expected. Importantly, a detailed analysis of median wealth within countries and across the world shows that global wealth inequality has fallen this century due to faster growth achieved in emerging markets. Global median wealth has risen roughly twice as fast as global wealth per adult and much more rapidly than global GDP. The average household has thus been able to build up wealth over the last two decades.
At the top of the wealth pyramid, the United States continues to rank highest with over 140,000 ultra-high-net-worth individuals (with wealth above USD 50 million) followed by China with 32,710 individuals. Worldwide, we estimate that there were 62.5 million millionaires at the end of 2021, 5.2 million more than the year before. At the bottom of the wealth pyramid, there is now some evidence concerning the wealth impact of the policy reactions to the pandemic on various subgroups, but it will be some years before survey data gives a clear indication of the full distributional effects. Distribution financial accounts (DFA) in the United States suggest that the wealth share of the bottom 50% of households in the United States increased from 1.84% to 2.64%, mostly due to a rise in the value of real estate.
Wealth outlook
While some reversal of the exceptional wealth gains of 2021 is likely in 2022/2023 as several countries face slower growth or even recession, our five-year outlook is for wealth to continue growing. We would expect global wealth to increase by USD 169 trillion by 2026, a cumula- tive rise of 36%, with middle-income countries primarily driving global wealth increases. Our forecast is that, by 2024, global wealth per adult should pass the USD 100,000 threshold and that the number of millionaires will exceed 87 million individuals over the next five years.
Nannette Hechler-Fayd’herbe
Chief Investment Officer for the EMEA region and Global Head Economics & Research of Credit Suisse
