Recovery, Inequality, and Regional Dynamics

The Global Wealth Report 2024 and global wealth levels, including their recovery, distribution, and growth across different regions

1. Global Wealth Recovery in 2023

• Rebound in Wealth: After a 3% decline in 2022, global wealth rebounded by 4.2% in 2023. This recovery reversed the previous year's loss, marking a return to the long-term trend of increasing global wealth.
• Regional Contributions: The recovery was led by Europe, the Middle East, and Africa (EMEA), which saw a 4.8% increase in wealth, followed by Asia-Pacific (APAC) with 4.4%, and the Americas with 3.6%.

2. Regional Wealth Levels

• EMEA: EMEA had the highest average wealth per adult at just over USD 166,000. However, this region has experienced the slowest growth since 2008, with an increase of only 41%.
• APAC: The Asia-Pacific region saw the fastest wealth growth, with an average increase of 122% since 2008, bringing the average wealth per adult to just over USD 156,000.
• Americas: The Americas had an average wealth per adult of USD 146,000, with a growth rate of 110% since 2008. The United States alone contributed significantly to this growth, with the highest number of millionaires globally.

3. Wealth Distribution and Growth

• Wealth Distribution: The distribution of wealth has seen a notable shift. The proportion of adults in the lowest wealth band (under USD 10,000) nearly halved from over 75% in 2000 to below 40% in 2023. Simultaneously, the middle wealth band (USD 10,000 to USD 100,000) grew from 17% to nearly 43% of the global population.
• Millionaires: The number of millionaires increased significantly, with millionaires now accounting for 1.5% of the global adult population. The United States leads with nearly 22 million millionaires, or 38% of the global total. Mainland China follows with just over six million millionaires.

4. Inflation and Real Wealth Growth

• Impact of Inflation: Inflation has consistently eroded wealth growth. Since 2008, real wealth has grown by an average of 4.7% per year, compared to the nominal growth rate of 5.2%. However, in 2023, real wealth growth exceeded nominal growth, reaching nearly 8.4% due to a reduction in inflation from its 2022 peak.

5. Long-Term Trends and Slowdown

• Slowdown in Growth: Despite the rebound in 2023, the long-term trend shows a slowdown in global wealth growth. Between 2000 and 2010, global wealth grew at an average annual rate of 7%, but this slowed to just over 4.5% from 2010 to 2023.
• Regional Disparities: The slowdown has been more pronounced in regions like Japan and Italy, where shrinking populations and aging societies have contributed to reduced economic activity and wealth growth.

6. Currency Effects on Wealth

• Currency Impact: The report highlights the significant impact of currency fluctuations on wealth levels. For instance, in Japan, wealth growth in USD terms was only 2%, but when measured in local currency, it was over 9%. Conversely, in Switzerland, a 3.6% growth in USD terms turned into a nearly 6% decline when measured in Swiss francs.

7. Wealth Composition: Financial vs. Non-Financial Wealth

• Wealth Composition: The composition of wealth varies by region. In EMEA, financial wealth has grown by 53% since 2008, while non-financial wealth increased by 29%. In contrast, APAC saw non-financial wealth grow by 187%, outpacing the 170% growth in financial wealth.

The analysis of global wealth levels in the Global Wealth Report 2024

The report tells us that while global wealth is growing and recovering from recent setbacks, the growth is uneven, with significant regional disparities and ongoing issues of wealth concentration and inequality. Inflation, demographic changes, and currency fluctuations continue to play a significant role in shaping global wealth dynamics. The long-term slowdown in wealth growth, particularly in mature economies, suggests that the rapid gains of the past may not be sustainable, pointing to a future where managing and preserving wealth becomes increasingly important.

1. Global Wealth Recovery and Resilience:

• Strong Rebound: Despite the economic challenges of 2022, global wealth demonstrated resilience by rebounding 4.2% in 2023. This indicates a robust recovery, showing that global wealth is generally on an upward trajectory despite short-term fluctuations.
• Regional Differences in Recovery: The recovery was uneven across regions, with EMEA leading the rebound, followed by APAC and the Americas. This suggests that while global wealth is growing, the pace and strength of this growth vary significantly depending on the region.

2. Shifts in Wealth Distribution:

• Decreasing Poverty: The proportion of adults in the lowest wealth bracket (under USD 10,000) has significantly decreased, nearly halving since 2000. This trend indicates that global wealth is becoming more evenly distributed, with more people moving into higher wealth brackets.
• Rising Middle Class: The middle wealth band (USD 10,000 to USD 100,000) has expanded significantly, suggesting that a larger segment of the global population is now achieving moderate wealth levels, contributing to the growth of a global middle class.

3. Inequality and Concentration of Wealth:

• Increase in Millionaires: The number of millionaires has risen sharply, particularly in the United States. This points to a concentration of wealth among the wealthy, even as overall wealth levels rise.
• Continued Wealth Inequality: While the overall number of millionaires has increased, wealth inequality persists. Wealth remains highly concentrated, with the top 1.5% of the global population controlling nearly half of the world’s wealth. This highlights the ongoing disparity between the richest and the rest of the population.

4. Impact of Economic and Demographic Factors:

• Inflation’s Erosion of Wealth: Inflation continues to erode real wealth growth, though the reduction in inflation in 2023 allowed real wealth growth to outpace nominal growth. This underscores the importance of controlling inflation to preserve wealth.
• Demographic Challenges: Regions with aging populations, like Japan and Italy, are experiencing slower wealth growth. This suggests that demographic factors, such as population aging and declining birth rates, are critical in shaping long-term wealth trends.

5. Currency Fluctuations and Wealth Volatility:

• Currency Effects: Currency fluctuations can significantly impact wealth levels, as seen in the discrepancies between wealth growth in local currencies and USD terms. This highlights the volatility and risks associated with global wealth when currency exchange rates fluctuate.

6. Long-Term Slowdown in Wealth Growth:

• Decelerating Growth: The long-term trend shows that global wealth growth is slowing, particularly in more mature economies. This slowdown, from an average of 7% annual growth in the 2000s to 4.5% in the 2010s and beyond, indicates that the rapid accumulation of wealth seen in the early 21st century may be tapering off.

7. Regional Wealth Composition:

• Differences in Wealth Composition: The composition of wealth varies significantly by region, with APAC seeing more growth in non-financial assets (like real estate) compared to financial assets. This regional difference indicates that the sources and types of wealth accumulation can vary greatly depending on local economic conditions and investment patterns.