In Multipolarity

By Credit Suisse, published on Dec 28, 2016

According to the recent Credit Suisse Research Institute’s Global Wealth Report, three quarters of global adult population fit into the bottom echelon of the wealth pyramid. The 3.5 billion adults with wealth below 10,000 dollars account for 2.4 per cent of global wealth. In contrast, the 33 million millionaires comprise less than 1 per cent of the adult population, but own 46 per cent of household wealth.
Wealth differences between individuals occur for many reasons. Variation in average wealth across countries accounts for much of the observed inequality in global wealth, but there is also considerable disparity within countries. Those with low wealth are disproportionately found among the younger age groups, who have had little chance to accumulate assets. Others may have suffered business losses or personal misfortune, or live in regions where prospects for wealth creation are more limited. Opportunities are also sometimes constrained for women or minorities. In contrast, many individuals can be found at the other end of the spectrum who have acquired large fortunes through a combination of talent, hard work and good luck.

The layers of the wealth pyramid are quite distinctive. The base tier has the most even distribution across regions and countries, but also the most uneven range of personal circumstances. In developed countries, about 20 per cent of adults fall within this category. For the majority, membership is either transient – due to business losses or unemployment, for example – or a lifecycle phase associated with youth or old age. In contrast, more than 90 per cent of the adult population in India and Africa falls within this range. For many residents of low-income countries, life membership of the base tier is the norm rather than the exception.

In terms of global wealth, USD 10,000 –100,000 is the mid-range band. It covers around 900 million adults who represent a high proportion of the middle class in many countries. The average wealth of this group is quite close to the overall global mean wealth. India and Africa are under-represented in this segment, whereas China’s share is disproportion­ately high. China and India provide an interesting contrast. India accounts for just 3.1 per cent of those with mid-range wealth, and that share has changed very little during the past decade. China accounts for 33 per cent of those with wealth between USD 10,000 and USD 100,000, ten times the number of Indians, and double the proportion of Chinese in 2000.

The top tiers of the wealth pyramid – covering individuals with net worth above USD 100,000 – comprised 5.9 per cent of all adults at the turn of the cen­tury. The proportion rose rapidly until the financial crisis, but has remained quite stable since that time. It currently comprises 8.2 per cent of the global total. Regional composition differs markedly from the strata below. Europe, North America and the Asia-Pacific region (omitting China and India) together account for 89 per cent of the group, with Europe alone providing 144 million members (36 per cent of the total). This compares with just 5 million adult members (1.2 per cent of the global total) in India and Africa combined.

Millionaires by country in 2016 (image by Credit Suisse)

The pattern of membership changes once again for the US dollar millionaires at the top of the pyramid. The United States scores high on all three criteria, and has by far the greatest number of millionaires at 13.6 million, or 41 per cent of the worldwide total. For many years, Japan held second place in the millionaire rankings– with 13 per cent of the global total in 2011. However, the number of Japanese millionaires has fallen, alongside a rise in other countries. a consequence, Japan lost its second place to the United Kingdom in 2014, but bounced back again this year because of exchange rate appreciation. After a drop this year, the United Kingdom falls to third place with seven per cent of millionaires worldwide.

The wealth pyramid captures the contrasting circumstances between those with net wealth of a million US dollars or more, and those lower down in the wealth hierarchy. Discus­sions of wealth holdings often focus exclusively on the top tail. Credit Suisse Global Wealth Report provides a more complete and balanced picture, believing that the base and middle sections are interesting in their own right. One reason is the sheer size of numbers and their political power. However, their combined wealth of USD 35 trillion also yields considerable economic opportunities, which are often overlooked. Addressing the needs of these asset owners can drive new trends in both the consumer and financial industries. China, Korea and Indonesia are examples of countries where individuals have been rising rapidly through this part of the wealth pyramid. India has not shown similar progress to date, but has the potential to grow rapidly in the future from its low starting point.

While the middle and lower levels of the pyramid are important, the top segment will likely continue to be the main driver of private asset flows and invest­ment trends.

Credit Suisse Research Institute has been publishing its annual Global Wealth Report since 2010. Over the years, the report has established itself as the most comprehensive source of information on global household wealth. It provides complete estimates of wealth, covering all regions and the entire wealth spectrum.


Credit Suisse 2016 global wealth report reveals world’s most unequal countries

By Adam Withnall, The Independent, Nov 23, 2016

The lower half of the global population collectively owns less than 1 per cent of global wealth, while the richest 10 per cent of adults own 89 per cent of all wealth

World’s most unequal countries (StatisticaCharts, based on Credit Suisse Wealth Report 2016)

The global economic recovery since the 2008 crash has failed to reach all levels of society and inequality continues to grow, according to a major report. Credit Suisse’s Global Wealth Report 2016 identified Russia as the world’s most unequal country, with a staggering 74.5 per cent of the nation’s wealth controlled by the richest one per cent of people. In India and Thailand, the top one per cent own nearly 60 per cent of the wealth, while the figure was around 50 per cent for Indonesia and Brazil.

Credit Suisse said the world had been growing more equal from the start of the century until 2008. “The trend reversed after the financial crisis”, its report notes however, and while the most recent data is only provisional it looks set to continue to get more unequal.

Overall, it said wealth inequality was a major issue “in almost every part of the world”. “Our estimates suggest that the lower half of the global population collectively owns less than 1 per cent of global wealth, while the richest 10 per cent of adults own 89 per cent of all wealth, with the top 1 per cent accounting for half of all global assets,” the report notes.

Since its report last year, Credit Suisse identified the U.S. and Japan as the biggest earners in the world in terms of improving household wealth, while Switzerland was once again named the richest country per capita. And the biggest loser? Thanks to the Brexit vote and the subsequent crash in value of the pound, the UK was ranked as suffering the worst losses in household wealth in the world in the last year.

Credit Suisse estimates that the decision to leave the EU wiped £1.5 trillion from Britain’s collective wealth, and saw the number of US dollar millionaires in the country fall by 406,000. The next biggest loser on this metric, Switzerland, was down just 58,000.

Reference:
Global Wealth 2016: The Year in Review
, by Credit Suisse

This year’s Credit Suisse Global Wealth Report confirms a course of weak global wealth growth. In the past 12 months, global wealth has risen by USD 3.5 trillion to USD 256 trillion, which represents an increase of 1.4%. However, wealth creation has merely kept pace with population growth. As a result, in 2016, wealth per adult was unchanged for the first time since 2008, at approximately USD 52,800. Among the major economies, the USA and Japan were able to generate substantial additional wealth, while the United Kingdom recorded a significant decline as a result of currency depreciation.

To be in the wealthiest 10 per cent, a person needs USD 71,600. Half of all adults all over the world own less than USD 2,222, while those in the bottom 20% own less than USD 248. The economic inequality has increased this year. It is estimated that the top percentile own 50.8% of global household assets. Download the pdf of the 2016 Credit Suisse report here.

Facts and figures:

  • One billion adults globally own less than $US248
  • Ten per cent of all adults own more than $US71,600

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