According to Credit Suisse and UBS, global wealth experienced its first decline since the 2008 financial crisis. The report, known as the Global Wealth Report, revealed that total private wealth decreased by 2.4% to $454.4 trillion, while wealth per adult dropped by 3.6% to $84,718 by the conclusion of 2022.
The study concluded that a significant portion of the decrease could be attributed to the strengthening of the U.S. dollar compared to various other currencies. It highlighted that the reductions were predominantly concentrated in affluent areas, notably North America and Europe, which accounted for the majority of the contraction at a combined total of $10.9 trillion.
Economist Anthony Shorrocks, one of the report’s authors, remarked, “The major factors behind the decline in wealth in 2022 were primarily the effects of elevated inflation and the appreciation of the U.S. dollar in relation to numerous other currencies.”
Insights from the Global Wealth Landscape
Financial assets played the biggest role in the reduction of wealth, whereas non-financial assets, predominantly real estate, demonstrated resilience despite the swift ascent of interest rates,” Shorrocks explained. “However, the proportions attributed to financial and non-financial assets might invert in 2023 if housing prices decrease as a reaction to the elevated interest rates.
In market-related measurements, the most substantial declines were observed in the United States, followed by Japan, China, Canada, and Australia.
As per the report, Russia experienced the most substantial increases in the past year, succeeded by Mexico, India, and Brazil.
The global decrease in wealth in 2022 came on the heels of a surge in the preceding year.
“Wealth transformation exhibited resilience amid the period of COVID-19 and expanded exceptionally in 2021,” stated Nannette Hechler-Fayd’herb, the global head of economics and research at Credit Suisse. “However, inflation, escalating interest rates, and currency devaluation led to a turnaround in 2022.”
In spite of marking the initial decrease in global wealth since the Great Recession, the Global Wealth Report provided a positive projection for the future, forecasting a robust 38% increase in global wealth over the upcoming five years.
Conclusion
The annual report from Credit Suisse and UBS revealed a first global wealth decline since 2008. Total private wealth fell by 2.4% to $454.4 trillion, with wealth per adult at $84,718 by 2022-end. The drop linked to a stronger US dollar and focused on affluent regions, with major losses in North America and Europe. Inflation and the dollar’s rise were central factors, noted economist Anthony Shorrocks.
