Global wealth to grow by 38pc over next 5 years, reaching $629 trillion by 2027: report

December 13, 2023

The ranks of HNW and UHNW individuals are only set to rise

The future looks promising. That said, the 2023 edition of the Credit Suisse Global Wealth Report reflects on a year that has delivered a significant setback in what had been a consistent uptrend in the accumulation of wealth in the household sector.

2022 recorded the first fall in net global household wealth since the global financial crisis of 2008, according to the report published by Credit Suisse owner UBS.

Measured in current nominal U.S. dollars, total net private wealth fell by $11.3 trillion (–2.4 percent) to $454.4 trillion at the end of the year.

Wealth per adult also declined by $3,198 (–3.6 percent) to reach $84,718 per adult at end-2022.

“Much of this decline comes from the appreciation of the U.S. dollar against many other currencies,” the report said.

“If exchange rates are held constant at 2021 rates, then total wealth increased by 3.4 percent and wealth per adult by 2.2 percent during 2022. This is still the slowest increase of wealth at constant exchange rates since 2008.”

Keeping exchange rates constant but counting the effects of inflation results in a real wealth loss of –2.6 percent in 2022.

A more detailed examination shows that financial assets contributed most to wealth declines in 2022, while non-financial assets – mostly real estate – stayed resilient, despite rapidly rising interest rates.

But the relative contributions of financial and non-financial assets may reverse in 2023 if house prices decline in response to higher interest rates, per Credit Suisse.

The global wealth pyramid 2022. Source: Credit Suisse, UBS

Regional and demographic themes
Regionally, the loss of global wealth was heavily concentrated in wealthier regions such as North America and Europe, which together shed $10.9 trillion.

Asia Pacific recorded losses of $2.1 trillion, while Latin America is the outlier with a total wealth increase of $2.4 trillion, helped by an average 6 percent currency appreciation against the U.S. dollar.

Heading the list of losses in country terms in 2022 is the United States, followed by Japan, China, Canada and Australia.

The largest wealth increases at the other end were recorded for Russia, Mexico, India and Brazil.

In terms of wealth per adult, Switzerland continues to top the list followed by the United States, Hong Kong SAR, Australia and Denmark despite sizable reductions in mean wealth versus 2021, per the report.

Ranking markets by median wealth results in a different list, with Belgium in the lead followed by Australia, Hong Kong SAR, New Zealand and Denmark.

When looked at in demographic terms, Generation X and millennials continued to do relatively well in 2022 in the U.S. and Canada, but were not immune to the overall wealth reduction.

Broken down by race, non-Hispanic Caucasians in the U.S. saw their wealth decrease in 2022, while African Americans were left almost unscathed by the downturn.

In contrast, Hispanics achieved 9.5 percent growth in 2022, owing to their greater holdings of housing assets compared to financial assets.

Regional composition of global wealth distribution in 2022. Source: Credit Suisse, UBS

Reduction in wealth inequalities
Along with the decline in aggregate wealth, overall wealth inequality also fell in 2022, with the wealth share of the global top 1 percent falling to 44.5 percent.

The number of U.S. dollar millionaires worldwide fell by 3.5 million during 2022 to 59.4 million people before taking into account 4.4 million “inflation millionaires” who would no longer qualify if the millionaire threshold were adjusted for inflation in 2022, per the report.

Global median wealth, arguably a more meaningful indicator of how the typical person is faring, did in fact rise by 3 percent in 2022 in contrast to the 3.6 percent fall in wealth per adult.

For the world as a whole, median wealth has increased five-fold this century at roughly double the pace of wealth per adult, largely due to the rapid wealth growth in China.

Number of U.S. dollar millionaires (percentage of world total) by market, 2022. Source: Credit Suisse, UBS

Brighter outlook
According to Credit Suisse projections, global wealth will rise by 38 percent over the next five years, reaching $629 trillion by 2027, according to Credit Suisse.

Growth by middle-income countries will be the primary driver of global trends.

Credit Suisse estimates wealth per adult to reach $110,270 in 2027 and the number of millionaires to reach 86 million, while the number of ultra-high-net-worth individuals (UHNWIs) is likely to rise to 372,000 individuals.

“The global economy is experiencing a period of astonishing economic alteration,” said UBS Global Wealth Management chief economist Paul Donovan in the report.

“The sweeping changes of the fourth industrial revolution represent the most dramatic structural upheaval in 250 years,” he said. “Revolutions, it turns out, are revolutionary – social as well as economic relationships will be challenged by this process.

“At the same time, the economic needs of humanity have evolved from the crude pursuit of material possessions represented by output economics.

“Society today has advanced to impact economics, adding broader demands for a sustainable and more equitable future to our traditional material demands.

“Properly mobilizing private wealth is critical in this period of change. Whether as a source of investment or philanthropy, private wealth will shape the opportunities that are presented by technological change.

“It is private wealth that will lead the funding needed to create diverse, sustainable societies.”

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