Print this article

Global Wealth of HNWIs Rises Rapidly in 2004—Merrill/Capgemini Report

Contributing Editor

10 June 2005

World wealth of high net worth individuals rose 8 per cent in 2004 to $30 trillion. The world’s wealthiest are growing fastest in the Middle East, North America and Asia, according to the World Wealth Report, an annual survey conducted by Merrill Lynch and CapGemini. The growth rate of high net worth individuals in the European Union was only 4.1 per cent in 2004, compared with 9.9 per cent in North America. The report blamed the slower growth rate on structural weaknesses such as high unemployment in some of the major economies and rigid labour markets. The World Wealth Report defines HNWIs as individuals with at least $1 million, excluding their primary residence. But growth rates varied considerably throughout Europe. According to the report, HNWIs in the UK rose by 8.9 per cent to 417,500 in 2004. Merrill said the results placed the UK in the top 10 countries by HNW population growth and their combined wealth also rose by 13.5 per cent to reach over $1.5 trillion. Spain also saw strong growth of HNWIs in 2004, rising by 8.7 per cent. And some of the new members of the European Union like the Czech Republic also saw strong HNW growth rates in 2004. But growth rates of the wealthy in France, Italy and Germany was much slower. France saw HNWs rise by 2.6 per cent—in Italy and Germany the growth rate was even slower. The HNW population in the Asia-Pacific region rose by 8.2 per cent and their wealth grew by 8.5 per cent. Within the Asia-Pacific region, Singapore, Hong Kong and Australia showed impressive growth in HNWI populations, gaining 22.4 per cent, 18.8 per cent and 14.8 per cent more members, respectively. The so-called BRIC nations (Brazil, Russia, India and China) are achieving very high economic growth rates and consequently seeing rapid growth in HNWIs. India saw the number of HNWs rise by 14.6 per cent to 70,000, the fifth highest growth rate in the world in 2004. Interestingly, South Africa saw the number of HNWIs grow by 21.6 per cent in 2004, the second highest growth rate in the world during 2004. But the number one wealthy growth rate was reserved for Singapore, which witnessed a staggering 22.4 per cent growth rate in its HNW population last year. Merrill and CapGemini expect world economic growth rates to slow down in 2005, largely because of expected monetary tightening against the background of inflationary pressures in many of the world’s economies. But the report pointed out that by Chinese standards, slower growth equates to an 8.4 per cent rise in real GDP—still very high compared to most other economies. The report’s authors also expressed concerns that the world economy might hit an air pocket if the US dollar were to crash, although this is considered unlikely by Merrill and CapGemini. Slower world economic growth will see HNW wealth growth fall to 6.5 per cent over a compounded period until 2009, where the world’s wealthy would have amassed around $42.2 trillion.