Quite contrary to what could be expected, accumulated wealth in the world increased by a considerable 7.4% in 2020 and that of adult individuals broke a new record by growing by 6% and reaching an average of $ 79,952, defying the crisis of the pandemic and its effects on the real economy, according to the annual report on global wealth of the bank Credit Suisse.
The main explanation is that, unlike what happened during the 2008 financial crisis, governments and central banks took swift and determined measures to mitigate this crisis.
“The speed and unprecedented nature of the policies that were taken reversed the decline of the markets, which looked to the future in a positive way,” said Nannette Hechler, head of investments in the area of international wealth management at Credit Suisse. in the presentation of the report to the press.
Although at the beginning of the pandemic, in the first quarter of 2020, the impact on the markets was severe and household wealth decreased by 17.5 trillion dollars (-4.4%), the recovery was quite fast and that loss has already been had dissipated in the middle of the year, which closed with an additional $ 28.7 trillion of wealth from the end of 2019.
The result was that year-on-year growth in wealth was 7.4% to $ 418 trillion, although the general depreciation of the US dollar contributed 3.3% to this increase.
“Wealth creation in 2020 appears to have been completely disconnected from the economic disaster caused by COVID-19,” acknowledged economist Anthony Shorrocks, lead author of the study, which is now in its 12th edition and has become reference information on the theme of wealth, its accumulation and distribution.
Among the reasons for the increase in wealth is the continued growth of the stock markets, which reached record levels at the end of 2020, as well as the appreciation of the real estate sector, stimulated by the low interest rates and the unexpected savings that a part of the population did during the lockdowns.
The regions where the increase in wealth was most notable were North America and Europe, with 12.4% and 9.2%, respectively, while the third big winner was China, which alone accounted for 4.2% of the increase in global wealth.
The biggest losers were India (-4.4%) and Latin America (-11.4%). In both places, the fall was amplified by the depreciation of exchange rates.
Hechler commented that one of the reasons why some countries have increased their wealth and others have lost it is the difference in the composition of their stock markets.
The report has also confirmed the increase in the number of people at the highest levels of the wealth distribution pyramid.
With between zero and 10,000 dollars is 55% of the world’s adult population (2,879 million adults), which accumulates 5.5 billion dollars, compared to 1.1% of adults (56 million people) with more than one million dollars and that together they have a wealth of 191.6 trillion dollars.
In the middle are those with between 10,000 and 100,000 dollars, which are 32.8% of the adult population and accumulate 57.3 billion dollars. This is the segment that has grown the most in the last twenty years and has gone from being made up of 507 million adults to 1.7 billion in mid-2020, according to the report.
In the $ 100,000-1 million category is 11.1% of adults, who together have $ 163.9 billion.
The most surprising thing is that when it is estimated that the pandemic caused the loss of the equivalent of more than 140 million jobs in 2020, according to data from the International Labor Organization (ILO), that same club of the ultra-mega-rich was joined by a 24% additional members, the strongest increase since 2003, according to Credit Suisse.
According to the calculations of the economists of this entity, wealth will increase by 39% in the next five years and will reach 583 trillion dollars in 2025. This despite the fact that a recovery in employment is not expected in all regions until 2023 ( taking 2019 as a reference).
