The Credit Suisse Research Institute has published its twelfth Global Wealth Report. The report shows that the total global wealth grew by 7.4% despite the world challenges of 2020.
Wealth creation in 2020 was largely immune to the challenges facing the world due to the actions taken by governments and central banks to mitigate the economic impact of COVID-19. Total global wealth grew by 7.4% and wealth per adult rose by 6% to reach another record high of USD 79,952. Overall, the countries most affected by the pandemic have not fared worse in terms of wealth creation.
The pandemic had a profound short-term impact on global markets in the first quarter of 2020. The report estimates that USD 17.5 trillion was lost from total global household wealth between January and March 2020, equivalent to a fall of 4.4%. This was largely reversed by the end of June. Surprisingly, in the second half of 2020 share prices continued on an upward path, reaching record levels by the end of the year. Housing markets also benefitted from the prevailing optimism as house prices rose at rates not seen for many years. The net result was that USD 28.7 trillion was added to global household wealth during the year.
- Aggregate global wealth rose by USD 28.7 trillion to reach USD 418.3 trillion at the end of the year. In terms of current US dollars, total wealth grew by 7.4% and wealth per adult was up 6.0%. However, widespread depreciation of the US dollar accounted for 3.3 percentage points of the growth. If exchange rates had remained the same as in 2019, total wealth would have grown by 4.1% and wealth per adult by 2.7%.
- The regional breakdown shows that total wealth rose by USD 12.4 trillion in North America and by USD 9.2 trillion in Europe. These two regions accounted for the bulk of the wealth gains in 2020, with China adding another USD 4.2 trillion and the Asia-Pacific region (excluding China and India) another USD 4.7 trillion.
- India and Latin America both recorded losses in 2020. Total wealth fell in India by USD 594 billion, or 4.4% in percentage terms. This loss was amplified by exchange rate depreciation: at fixed exchange rates, the loss would have been 2.1%. Latin America appears to have been the worst performing region, with total wealth dropping by 11.4% or USD 1.2 trillion.
- Total debts increased by 7.5% and would likely have increased much more if households had not been obliged to save more by the constraints on spending. Total debt rose markedly in China and Europe, but declined in Africa and in Latin America, even after allowance is made for exchange rate depreciation.
- Windfalls from unplanned savings and prevailing low interest rates saw a revival in housing markets during the second half of 2020. The net result was a better-than-average year for homeowners in most countries.
Global wealth levels 2020
- Wealth impacts of the pandemic have differed among population subgroups due to two main factors: portfolio composition and income shocks. The wealth of those with a higher share of equities among their assets, e.g. late middle age individuals, men, and wealthier groups in general, tended to fare better. Homeowners in most markets have seen capital gains due to rising house prices.
- There have been large differences in income shocks during the pandemic. In many high-income countries the loss of labor or business income was softened by emergency benefits and employment policies. In countries with an absence of income support, vulnerable groups like women, minorities and young people were particularly affected.
- Female workers initially suffered disproportionately from the pandemic, partly because of their high representation in businesses and industries badly affected by the pandemic, such as restaurants, hotels, personal service and retail. Labor force participation declined over the course of 2020 for both men and women, but the size of the decline was similar, at least in most advanced economies.