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The world is getting richer, but who is benefiting the most?

2024-07-13 10:47:14Lifestyle SHKRUAR NGA REDAKSIA VOX

The world is getting richer, but who is benefiting the most?

The value of assets across the globe rose to $477 trillion (€441 trillion) in 2023, according to this year's global wealth report by Boston Consulting Group (BCG). That's a jump of 4.3%, a figure driven higher by a recovery in financial wealth, which rose by nearly 7%. Financial wealth, a sub-section of total wealth, excludes real assets such as property and land, as well as liabilities. These insights come as a positive sign after a difficult post-covid period, when high interest rates and currency devaluation hit pockets across the globe.

In 2022, total wealth grew by only 0.2%, while financial wealth fell by 4%. However, BCG noted that a full recovery has yet to be achieved. A total wealth growth of 4.3% is still modest compared to an average annual growth rate of 7.1%, achieved from 2014 to 2021. Looking at the period from 2022 to 2023, the annual growth rate of net wealth was the highest in Latin America (7.9%), followed by the Middle East and Africa (7.8%). When compared to the projected annual growth rate for 2023-2028, the Middle East and Africa is at the top (10%), followed by Latin America.

Despite experiencing the most dramatic growth, this does not mean that these regions are the wealthiest. Instead, wealth is overwhelmingly concentrated in North America, followed by the Asia-Pacific region and then Western Europe. "Financial wealth in the developed economies of North America and Western Europe was hit particularly hard in 2022, but both regions rebounded in 2023," BCG said. "North America was among the fastest growing regions, accounting for more than 50% of all new financial wealth in 2023, driven by a major recovery in the stock market."

Financial gains were notably boosted by technology and semiconductor stocks, with Apple, Nvidia and Microsoft becoming the first companies to reach market capitalizations in the $3 trillion (€2.77 trillion) range. Growth in Western Europe was slightly lower in terms of financial wealth. According to BCG, this was not only due to lower stock market returns, but investors also put less of their money into stocks.

Financial wealth similarly showed low momentum in the Asia-Pacific region, growing by 5.1% in 2023. The report suggested this was largely due to a slowdown in wealth creation in China, although strong growth is expected in the period to 2028. To focus on data from individual countries, it is useful to look at a parallel Global Wealth Report from UBS, also released on Wednesday.

Part of the study, which focuses on 56 countries, looks at average growth in wealth per adult from 2022 to 2023. The sharpest contraction was seen in Cyprus, with a drop of more than 30%. Mexico followed in the ranking, where wealth per population was close to 20%. Kazakhstan was next, registering a contraction of more than 17%. Among Western European economies, Switzerland and Italy fared worse, with declines of almost 6% and 4% respectively.

At the other end of the scale, Turkey stands out with a more than 157% increase in wealth per adult between 2022 and 2023, leaving all other nations far behind. The UK saw this figure grow by close to 10% a year, while Denmark's wealth per adult rose by almost 6%. UBS also collected data on the distribution of millionaires across the globe, a number expected to grow over the next few years. Most of these individuals are in the US, followed by mainland China and then the UK.


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