Household wealth to surge

12 October 2012

ZURICH: Global household wealth is likely to increase by over $100tr in the next five years as affluence rises in the US and key emerging markets, Credit Suisse has argued in a study.

The firm stated that worldwide household wealth fell by 5.2% in current dollar terms to $223tr from mid-2011 and mid-2012, the first annual decrease since 2007–08, when the financial crisis resulted in a contraction.

This was equivalent to an aggregate loss of $12.3bn. Europe, where economic conditions have been severe, accounted for $10.9bn of the decline, while Asia - excluding China and India - registered a slide of $1.3tr.

Looking ahead, the analysis predicted that the worldwide total should hit $330tr by 2017, representing an annual growth rate of 8%.

"From a global viewpoint, it is the emerging market giants - most especially China - which will continue to hold the key to household wealth creation in the immediate future," the study indicated.

At present, 3.2bn people have wealth of under $10,000, and are thus at the "base" of the pyramid, a segment worth $7.3tr. The "middle" 1bn adults valued at $10,000 to $100,000 are collectively worth $32.1tr.

A further 344m people boasted between $100,000 and $1m, or $95.9tr overall. The number of millionaires around the world has reached 29m, a group worth $87.5tr.

The US will remain the most affluent market in 2017, attaining a value of $89tr on this date. China will "edge" past Japan, with both nations on roughly $38tr. France should take fourth position here on $17.4tr ahead of Germany on $16.7tr.

By the end of the forecast period, the share of the globe's 4.6bn adults in the "base" will fall from 69.3% to 59.6%, while the middle grows from 22.5% to 30%, and the upper middle from 7.5% to 9.4%.

Of the 1.5bn adults worth $10,000 to $100,000 in 2017, some 44% will live in China in 2017, compared with 36% in 2012, and equating to an extra 275m consumers. India, where 90% of people are currently at the "base" level, will add another 40m individuals to this segment.

In a further indication of the growth of emerging markets, the amount of millionaires in China will rise by 97% to 1,901. Brazil will log a 119% lift to 497, with India up by 53% to 242 and Indonesia by 97% to 207.

Gross domestic product per capita is due to expand by 150% in Mongolia, 82% in Indonesia, 75% in Kazakhstan, 56% in Russia, 55% in China, and 34% in Thailand, Credit Suisse suggested, making them the "major drivers of wealth accumulation" to 2017.

Data sourced from Credit Suisse; additional content by Warc staff