Global household wealth will surge by almost 40 per cent over the next five years and has already risen 20 per cent above its pre-crisis peak, according to an annual global survey from Credit Suisse.

The world is – mostly – getting richer and wealth is likely to soar by almost 40 per cent over the next five years to reach $369 trillion, while emerging markets will increase their share of that largesse to 21 per cent over this period, with China accounting for almost 10 per cent from 8 per cent, a new report said today.

Today, the Credit Suisse Research Institute issued its fifth annual Global Wealth Report. The study said global wealth is now 20 per cent above its pre-crisis peak and 39 per cent above the low hit in the wake of the financial crisis.

In a finding likely to spark political controversy, the Credit Suisse study also said that wealth inequality has increased in certain markets, especially China and India, but actually declined in North America and Europe.

The US has achieved a sizable increase in wealth since mid-2013, with a rise of $8.9 trillion. It will remain the “undisputed leader in terms of aggregate wealth”, the report said, with total net worth of more than $114 trillion by 2019.

The number of millionaires worldwide is to increase by about 53 per cent in the next five years, reaching 53.2 million in 2019.

The report generally chimes with other studies, such as from RBC Wealth Management/Capgemini, that there has been a general recovery in wealth terms since the 2008 recovery. Whatever the travails of the wealth industry in terms of compliance costs and other challenges, the underlying fact is that more wealth is being created. An issue for business strategists is how much of this wealth increase has been brought about by genuine increases in productivity and innovation, and how much from asset price rises driven, in part maybe, by central bank money printing that at some point will come to an end.

Among other facts is that in Europe, wealth per adult has increased by more than 10 per cent as a result of a strong recovery in asset prices.

Switzerland ranks highest in average wealth, and has reached a new high of $581,000 per adult. Median wealth per adult in Australia, however, stands at $225,000, far outstripping Swiss median wealth of $107,000.

“The fifth annual Credit Suisse Global Wealth Report shows a $20.1 trillion rise in wealth to $263 trillion. North America and Europe stand out this year, with percentage gains exceeding 10 per cent in both cases. Developing economies have lagged as a result of weaker asset prices and currency pressures,” Giles Keating, Global Head of Research for Private Banking & Wealth Management, Credit Suisse, said.

Analysis
The analysis comprises the wealth holdings of 4.7 billion adults across more than 200 countries – from billionaires in the top echelon to the middle and bottom sections of the wealth pyramid, which Credit Suisse said other studies often overlook.

When household wealth changes are examined in more detail, total global household wealth increased in current dollar terms to $263 trillion, or $56,000 per adult in the world, an all-time high for average net worth. This is underpinned by a strong recovery in asset prices. On a regional basis, North America and Europe led the gains with increases of about 11 per cent. In contrast, aggregate wealth in Latin America was largely unchanged, whereas Asia-Pacific (including China and India) recorded a small rise of around 3 per cent. Excluding Japan, the region recorded a gain of about 4 per cent, with Chinese wealth rising by 3.5 per cent and Indian wealth falling by -1 per cent.

The UK, South Korea and Denmark recorded the largest percentage gains, while Ukraine, Argentina and Indonesia incurred the largest losses. In absolute terms, the UK added $2.3 trillion, while strength in the euro and strong equity markets meant that France, Germany and Italy together added $3.6 trillion to the stock of global wealth.

The G7 economies accounted for a share of 64 per cent of total wealth in mid-2013, but for more than 78 per cent of newly created wealth since then. Indonesia, Russia and Argentina recorded the largest dollar losses.

Allowing for the rise in the adult population, global net worth per adult has increased by 77 per cent from 2000, an average growth rate of 4.3 per cent per annum. Despite recording a 15 per cent decline during the financial crisis, wealth per adult has increased each year since 2008 and is now 7 per cent above its pre-crisis peak.

The share of financial wealth was 55 per cent of gross wealth in 2000, and fell to 49 per cent by 2008. Following the recovery of asset prices, financial assets have trended upwards since then, and now account for 54 per cent of gross wealth.

The richest nations, with wealth per adult over $100,000, are found in North America, Western Europe and among the rich Asia-Pacific and Middle East countries. Switzerland is the country with by far the highest wealth per adult, followed by Australia and Norway. Denmark and the UK have moved up two places and now rank 8th and 9th respectively in terms of wealth per adult. Singapore has lost three places, but is still among the top ten.