LONDON,
Oct. 10, 2012 /PRNewswire/
-- The Credit Suisse Research Institute today released its
third annual Global Wealth Report 2012, which finds that from
mid-2011 to mid-2012 aggregate global household wealth fell by 5.2%
in current dollar terms to USD 223
trillion due to the economic uncertainties of the past year
– particularly those affecting the Eurozone. Furthermore, the
relative stability of the US economy has led to an appreciation of
the USD against most currencies, but the impact is especially
apparent in Europe, raising the
aggregate wealth loss to USD 10.9
trn, by far the largest contribution to the total global
loss of USD 12.3 trn. Asia-Pacific was the other big regional loser,
shedding USD 1.4 trn.
(Logo:
http://photos.prnewswire.com/prnh/20091204/CSLOGO)
Against the backdrop of the Eurozone crisis, Credit Suisse in
its report also details the rise in household debt, which has risen
in aggregate by 81% from 2000-2012, and analyses household debt as
a fraction of net worth, i.e., typically 20-30% of wealth in
advanced economies.
In addition, Credit Suisse's research highlights household
wealth forecasts, including that it expects:
- Wealth to rise by almost 50% in the next five years from
USD 223 trillion in 2012 to
USD 330 trillion in 2017
- The number of millionaires worldwide to increase by about 18
million reaching 46 million in 2017
- China to add a total of
USD 18 trillion to the stock of
global wealth in the next five years and surpass Japan as the second wealthiest country in the
world
- The USA to remain on top of
the wealth league with USD 89
trillion by 2017
- The Eurozone's total wealth in the next 5 years to only equal
today's level of wealth in the USA, despite that the Eurozone counts 16
million more adults
Giles Keating, Global Head of
Research for Private Banking and Asset Management, Credit Suisse,
said: "The third annual Credit Suisse Global Wealth Report analyses
the overall patterns of wealth as one of the pillars of the
economic system from which we can extrapolate where economic growth
is coming from, assess the accumulation of capital, trends in
consumption and asset prices, and understand the drivers of growth
in specific industries such as healthcare and banking. This
year's report also includes comprehensive analyses of household
debt and government debt, to highlight which countries have
sustainable overall debt levels and which ones have the most
problems."
Credit Suisse Research Institute's Michael O'Sullivan and
Richard Kersley said: "There's no
question that the economic uncertainties of the past year –
particularly those affecting the Eurozone – have cast a huge shadow
over household wealth. Our research confirms that economic
recession in many countries combined with widespread equity price
reductions and subdued housing markets have produced the worst
environment for wealth creation since the financial crisis."
Professor Anthony Shorrocks, Co-author of the Credit Suisse
Global Wealth Report 2012, said: "Unlike any other, Credit Suisse's
analysis comprises the wealth holdings of 4.6 billion adults in the
world, from those with average wealth of just a few hundred dollars
or less in some developing countries, up through the emerging
middle classes in Asia and
elsewhere, to the billionaires at the top of the "wealth pyramid"
and across more than 200 countries; uses a variety of reliable
sources; and applies state-of-the-art techniques to estimate the
level and pattern of household wealth across individual
adults."
For a copy of the Credit Suisse Research Institute report,
"Global Wealth Report 2012," please click here. Full information on
sources and methodology is also provided in the Global Wealth
Databook 2012.
Changes in wealth from 2011-12
Total global household wealth fell 5.2% in current dollar
terms to USD 223 trillion, equivalent
to USD 49,000 per adult in the world,
the first decline since the financial crisis of 2007-08.
The relative stability of the US economy has led to an
appreciation of the USD against most currencies, but the impact is
especially apparent in Europe,
raising the aggregate wealth loss to USD
10.9 trn, by far the largest contribution to the total
global loss of USD 12.3 trn.
Asia-Pacific (including
China and India) was the other big regional loser,
shedding USD 1.4 trn. North America had a modest gain of
USD 882 billion.
Table 1: Changes in household wealth 2011-2012 by
region
Region
|
Change
in Total Wealth 2011-
12 USD bn
|
2011-12
%
|
Africa
|
-127
|
-5.0
|
Asia-Pacific (including China and India)
|
-1,449
|
-1.9
|
Europe
|
-10,882
|
-13.6
|
Latin
America
|
-760
|
-8.0
|
North
America
|
882
|
1.3
|
World
|
-12,336
|
-5.2
|
Despite the setbacks in 2007 and more recently, household wealth
has grown strongly over the past decade, with the global aggregate
doubling from the USD 113 trillion
recorded at the start of the millennium. Even controlling for the
rise in the global population and for exchange rate changes, net
worth has increased by 38% since the year 2000, equivalent to 2.7%
growth per annum. Using constant USD exchange rates reinforces the
view that the underlying trends have been, and continue to be,
broadly positive. In fact, aggregate global household wealth still
managed to rise by about 1% during the past year when USD exchange
rates are held constant.
Top of the wealth pyramid
Credit Suisse estimates suggest that worldwide there are
84,500 UHNW individuals, defined as those with net assets exceeding
USD 50 million. Of these, 29,300 are
worth at least USD 100 million and
2,700 have assets above USD 500
million. North America
dominates the regional ranking, with 40,000 UHNW residents (47%),
while Europe hosts 22,000
individuals (26%), and 12,800 (15%) reside in Asia-Pacific countries, excluding China and India.
In terms of single countries, the US leads by a huge margin with
37,950 UHNW individuals, equivalent to 45% of the group. The recent
fortunes created in China have
propelled it into second place with 4,700 representatives (5.6% of
the global total), followed by Germany (4,000), Japan (3,400), United Kingdom (3,200) and Switzerland (3,050). Numbers in other BRIC
countries are also rising fast, with 1,950 members in Russia, 1,550 in India and 1,500 in Brazil, and strong showings are evident in
Taiwan (1,200), Hong Kong (1,100) and Turkey (1,000).
Wealth of nations: Top 10 countries with the highest average
wealth per adult in mid-2012 (USD)
The richest nations, with wealth per adult over
USD 100,000, are found in
North America, Western Europe, and among the rich
Asia-Pacific and Middle East countries. They are headed by
Switzerland, which in 2011 became
the first country in which average wealth exceeded USD 500,000. Exchange rate changes have reduced
its wealth per adult from USD 540,000
in 2011 to USD 470,000 in 2012; but
this still remains considerably higher than the level in
Australia (USD 354,986) and Norway (USD
325,989), which retain second and third places despite falls
of about 10%. Close behind are a group of nations with average
wealth above USD 200,000, many of
which have experienced double digit depreciation against the US
dollar, such as France,
Sweden, Belgium, Denmark and Italy.
Table 2: Top 10 countries with the highest average wealth per
adult in mid-2012 (USD)
Ranking
|
Country
|
Average
wealth per adult
|
Change
since mid-2011 (%)
|
1
|
Switzerland
|
468,186
|
-13%
|
2
|
Australia
|
354,986
|
-11%
|
3
|
Norway
|
325,989
|
-7%
|
4
|
Luxembourg
|
277,119
|
-14%
|
5
|
Japan
|
269,708
|
1%
|
6
|
France
|
265,463
|
-15%
|
7
|
USA
|
262,351
|
1%
|
8
|
Singapore
|
258,117
|
-4%
|
9
|
UK
|
250,005
|
-6%
|
10
|
Sweden
|
237,297
|
-17%
|
Household debt
Recent concern with debt sustainability has focused almost
exclusively on sovereign debt and the vulnerability of the banking
sector. Yet the degree to which governments can finance external
debt in times of difficulty depends in part on the net assets of
the household sector. More importantly, when considering whether
their assets are sufficient to meet future consumption needs and
emergencies, households should take account of the debts that
governments are accumulating on their behalf.
Controlling for exchange rate changes, total household debt in
the world grew by 8% per annum during 2000-7, and then flattened
out. Over the whole period 2000-2012, aggregate debt rose by 81%,
equivalent to 5% growth per annum. Expressed as a fraction of net
worth, household debt is typically 20-30% of wealth in advanced
economies, but much higher levels are sometime recorded, for
example in Ireland (44%),
the Netherlands (45%) and
Denmark (51%).
Debt in proportion to wealth
Despite the rise in wealth, in most countries where
household debt exceeds USD 1 trillion
the ratio of debt to net worth rose during the period 2000‑8, on
average by about 50%. Debt in the United
States increased from 18.7% of net worth in 2000 to peak at
30.5% in 2008 before falling back to 21.7% in 2011. The
United Kingdom exhibited a very
similar pattern, with the debt ratio climbing from 15.2% to 23.4%
between 2000 and 2008, then dropping to 20% in 2012.The rise in the
debt-wealth ratio was even more precipitous in the Netherlands and Spain, and although the increase abated
slightly to 71% in the
Netherlands, no reduction is evident in Spain, for which the ratio is now 90% higher
than in 2000. Debt growth was also high in Italy, but from a much lower base, so that the
debt-wealth ratio of 11.1% in 2012 is not just the lowest among the
countries depicted, but actually below the average for the world as
a whole, which is 17.7%. France
(12.8%), Germany (16.4%) and
Japan (16.6%) now also fall below
the global average.
In the developing world, the absolute level of debt is seldom
more than USD 1,000 per adult, but
exceptionally high levels – above USD
5,000 per adult – are evident in Brazil, Chile
and South Africa.
Countries with government debt problems
Among the countries with the highest levels of net
government debt relative to household financial assets, the
situation in Japan, Poland and Spain appears to be manageable, at least from
the evidence up to 2011. In Hungary, government debt rose between 2000 and
2010, almost wiping out the total value of household financial
assets, but pulled back from the brink in 2011. Ireland appears more problematic. Net
government debt was close to zero in 2007, but has since grown
faster than any other country, and reached 92% of household net
financial assets in 2011.
Surprising findings
Credit Suisse's analysis of household debt has highlighted
a number of facts that may come as a surprise. For example,
Canada now has the highest debt to
income ratio among G7 countries, and Italy has the lowest. The countries with the
highest levels of household debt per adult – Denmark, Norway and Switzerland – are among the wealthiest and
most successful; average debt in Greece, Italy, Portugal and Spain is much lower. Debt has risen
significantly in advanced countries during the past decade, but on
nothing like the scale of the developing world, where almost every
country has surpassed the global average of 45% growth during
2000-2012.
Inheritance as a source of wealth differs by region
Inherited wealth likely accounts for 30-50% of total
household wealth in OECD countries based on reasonable
assumptions. In low growth or traditional societies, the
share is likely to be higher while in transition economies
extremely low. Of the total 1,226 billionaires in 2012 on the
Forbes list, 842 or 69% were self-made. China, Russia, and Eastern European countries account
for 209 billionaires of the total, but only two owe their fortune
to inheritance.
Wealth in the Future
Credit Suisse estimates suggests that the number of global
millionaires could exceed 46 million in the year 2017, a rise of
more than 18 million. While the number of millionaires in emerging
economies is still far below the levels in the USA (16.9 million) or Europe (15.4 million), it is expected to
increase substantially in the next few years. China could see its number doubling by 2017,
raising the total to almost 2 million. Credit Suisse also expects
to see a substantial increase in the number of millionaires in
various countries and in transition economies (see Table 3).
Table 3: Number of millionaires in 2012 and 2017 by regions,
selected countries and world
Country
|
Number
(thousand)
2012
|
Number
(thousand)
2017
|
Change
(%)
|
USA
|
11,023
|
16,876
|
53%
|
France
|
2,284
|
3,423
|
50%
|
UK
|
1,582
|
2,678
|
69%
|
Germany
|
1,463
|
2,556
|
75%
|
Brazil
|
227
|
497
|
119%
|
Korea
|
208
|
398
|
91%
|
Mexico
|
141
|
253
|
79%
|
Singapore
|
156
|
249
|
60%
|
Indonesia
|
104
|
207
|
99%
|
Russia
|
97
|
203
|
109%
|
Hong
Kong
|
92
|
180
|
96%
|
Turkey
|
84
|
144
|
71%
|
Poland
|
38
|
78
|
105%
|
Malaysia
|
36
|
75
|
108%
|
Colombia
|
46
|
64
|
39%
|
Chile
|
42
|
62
|
48%
|
Saudi
Arabia
|
46
|
54
|
17%
|
UAE
|
43
|
48
|
12%
|
Czech
Republic
|
24
|
40
|
67%
|
Region
|
Number
(thousand)
2012
|
Number
(thousand)
2017
|
Change
(%)
|
Africa
|
95
|
191
|
101%
|
Asia-Pacific (inc. China &
India)
|
6,889
|
11,736
|
70%
|
Europe
|
9,263
|
15,432
|
67%
|
LAC
|
527
|
978
|
86%
|
North
America
|
11,868
|
18,163
|
53%
|
World
|
Number
(thousand)
2012
|
Number
(thousand)
2017
|
Change
(%)
|
World
|
28,640
|
46,499
|
62%
|
Notes to Editors
- The Report defines wealth as the value of financial assets and
non-financial assets (mainly real estate), minus household
debt.
- All current data relate to mid-2012 and are at then-current
market exchange rates (not purchasing power parity).
- The figures presented in the Report are based on the best
available data on household assets and debts, updated and estimated
where necessary.
- Full information on sources and methodology is provided in the
Global Wealth Databook 2012.
- Projections to 2017 are made by the Credit Suisse Research
Institute and are based on forecasts of the three components of
wealth, financial assets, non-financial assets and debts.
To obtain a copy of the Credit Suisse Global Wealth Report 2012,
please visit:
https://www.credit-suisse.com/researchinstitute.
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial
services providers and is part of the Credit Suisse group of
companies (referred to here as 'Credit Suisse'). As an integrated
bank, Credit Suisse offers clients its combined expertise in the
areas of private banking, investment banking and asset management.
Credit Suisse provides advisory services, comprehensive solutions
and innovative products to companies, institutional clients and
high-net-worth private clients globally, as well as to retail
clients in Switzerland. Credit
Suisse is headquartered in Zurich
and operates in over 50 countries worldwide. The group employs
approximately 48,200 people. The registered shares (CSGN) of Credit
Suisse's parent company, Credit Suisse Group AG, are listed in
Switzerland and, in the form of
American Depositary Shares (CS), in New
York. Further information about Credit Suisse can be found
at www.credit-suisse.com.
Disclaimer
This document was produced by and the opinions expressed
are those of Credit Suisse as of the date of writing and are
subject to change. It has been prepared solely for information
purposes and for the use of the recipient. It does not constitute
an offer or an invitation by or on behalf of Credit Suisse to any
person to buy or sell any security. Any reference to past
performance is not necessarily a guide to the future. The
information and analysis contained in this publication have been
compiled or arrived at from sources believed to be reliable but
Credit Suisse does not make any representation as to their accuracy
or completeness and does not accept liability for any loss arising
from the use hereof.
Appendix
(1) Biographies of the authors
Anthony Shorrocks is Director of Global Economic
Perspectives Ltd. After receiving his PhD from the London School of Economics (LSE), he taught at the
LSE until 1983, when he became Professor of Economics at
Essex University, serving also as
Head of Department and Director of Economic Research for the
British Household Panel Study. In 2001 he was appointed Director of
the World Institute for Development Economics Research of the
United Nations University (UNU-WIDER) in Helsinki where he remained until 2009. He has
published widely on income and wealth distribution, inequality,
poverty and mobility and was elected a Fellow of the Econometric
Society in 1996. Publications include "The age-wealth relationship:
A cross section and cohort analysis" (Review of Economics and
Statistics1975), "The portfolio composition of asset holdings in
the United Kingdom" (Economic
Journal 1982), and, with Jim Davies
and others, "Assessing the quantitative importance of inheritance
in the distribution of wealth" (Oxford Economic Papers 1978), "The
distribution of wealth" (Handbook of Income Distribution 2000),
"The world distribution of household wealth" in Personal Wealth
from a Global Perspective (Oxford
University Press 2008), "The global pattern of household
wealth" (Journal of International Development 2009) and "The Level
and Distribution of Global Household Wealth" (Economic Journal
2011).
Jim Davies is a Professor
in the Department of Economics at the University of Western Ontario in Canada, where he has been a faculty member
since 1977 and served as chair of the department from 1992 to 2001.
He has been the director of the Economic Policy Research Institute
at UWO since 2001. Jim received his PhD from the London School of Economics in 1979. He recently
completed a five-year term as managing editor of Canadian Public
Policy. From 2006 to 2008, he directed an international research
program on household wealth holdings at UNU-WIDER in Helsinki and edited the resulting volume,
"Personal Wealth from a Global Perspective" (Oxford University Press 2008). He has authored two
books and over 60 articles and chapters in books on topics ranging
from tax policy to household savings and the distribution of
wealth. Publications include "The Relative Impact of Inheritance
and Other Factors on Economic Inequality" (Quarterly Journal of
Economics 1982), "Wealth and Economic Inequality" (Oxford Handbook
of Economic Inequality, Oxford
University Press, 2009), and several publications on wealth
authored jointly with Anthony Shorrocks and others.
Rodrigo Lluberas is a PhD
candidate in Economics at Royal Holloway College, University of
London and a visiting scholar at
the Institute for Fiscal Studies. He holds an MSc in Economics from
University College London and a BA in Economics from Universidad de
la Republica, Uruguay. Prior to
undertaking his MSc, he worked for three years as an economic
analyst at Watson Wyatt Global Research Services and more recently
as a research assistant at NESTA. His main areas of expertise are
pensions, consumption and wealth.
(2) Scope and methodology
The Credit Suisse Research Institute's third annual Global
Wealth Report 2012 (the Report) aims to provide the best available
estimates of the wealth holdings of households around the world for
the period since the year 2000. To be more precise, we are
interested in the distribution within and across nations of
individual net worth, defined as the marketable value of financial
assets plus non-financial assets (principally housing and land)
less debts. No country in the world has completely reliable
information on personal wealth, and for many countries there is
little direct evidence. So we are obliged to assemble and process
information from a variety of different sources. In the longer
Credit Suisse Global Wealth Databook that accompanies this report,
the methodology employed is described in more detail.
The procedure involves three main steps, the first two of which
mimic the structure followed by Davies, et al (2008, 2011). The
first step establishes the average level of wealth for each
country. The best source of data for this purpose is household
balance sheet (HBS) data which are now provided by 48 countries,
although 31 of these countries cover only financial assets and
debts. An additional 3 countries have household survey data from
which wealth levels can be calculated. Together these countries
cover 66% of the global population and 95% of total global wealth.
The results are supplemented by econometric techniques which
generate estimates of the level of wealth in 150 countries which
lack direct information for one or more years.
The second step involves constructing the pattern of wealth
holdings within nations. Direct data on the distribution of wealth
are available for 20 countries. Inspection of data for these
countries suggests a relationship between wealth distribution and
income distribution which can be exploited in order to provide a
rough estimate of wealth distribution for 143 other countries which
have data on income distribution but not on wealth ownership.
It is well recognized that the traditional sources of wealth
distribution data are unlikely to provide an accurate picture of
wealth ownership in the top-tail of the distribution. To overcome
this deficiency, the third step makes use of the information in the
"Rich Lists" published by Forbes Magazine and elsewhere to adjust
the wealth distribution pattern in the highest wealth ranges.
Implementing these procedures leaves 50 countries for which it is
difficult to estimate either the level of household wealth or the
distribution of wealth, or both. Usually the countries concerned
are small (e.g. Andorra,
Bermuda, Guatemala, Monaco) or semi-detached from the global
economy (e.g. Afghanistan,
Cuba, Myanmar, North
Korea), but not in every instance (e.g.Angola, Nigeria). For our estimates of the pattern of
global wealth, we assign these countries the average level and
distribution of the region and income class to which they belong.
This is done in preference to omitting the countries altogether,
which would implicitly assume that their pattern of wealth holdings
matches the world average. However, checks indicate that excluding
these nations from the global picture makes little difference to
the results.
Of note, China and India are treated as separate regions in the
report due to the size of their populations.
(3) The Credit Suisse Research Institute
The Credit Suisse Research Institute identifies and
provides insights on global themes and trends. The objective of the
Research Institute is to provide our clients with leading edge
advice by leveraging internal and external expertise, thus
reinforcing our integrated global bank approach.
The Institute was established in December
2008 to conduct research on new emerging or influential
topics, working with some of the world's most distinguished
experts, academics and institutions and Credit Suisse's global
network of analysts, and makes this available throughout the Bank
for the business units to create innovative products, solutions and
services for Credit Suisse's clients.
Clients increasingly require global reach, local expertise and
competitive products and services from the financial services
industry. The Institute's investigations are conducted with the
goal to furnish clients across divisions and regions with an
in-depth analysis of fundamental social, economic, scientific,
environmental and demographic trends that are expected to impact
global markets in the future.
The Research Institute is chaired by the Chairman of the Board
of Credit Suisse, Urs Rohner, and
managed by an Operating Committee from Credit Suisse's research
units from across the Bank. The Institute draws on eminent Senior
Advisors as well as selected Credit Suisse researchers to provide
advice, insight and guidance on global themes and trends for the
Institute's research agenda. The Institute's Senior Advisors are
characterized by their interdisciplinary backgrounds and networks
across sciences, academia, business and the political arenas. They
include Walter B. Kielholz, The Rt. Hon. Sir John Major, KH, CH, Dr. Laura D. Tyson, Long Yongtu, and Dr.
Ernesto Zedillo. For more
information, visit:
https://www.credit-suisse.com/researchinstitute.
SOURCE Credit Suisse AG