Global personal wealth up at slowest rate in 5 years: Study

Slowdown is a steep drop from the 7.5% gain reported in 2017

NEW YORK • Gains in global personal wealth ground to a near-halt last year, rising just 1.6 per cent for the weakest growth in five years.

The slowdown is a steep drop from the 7.5 per cent gain in personal global wealth in 2017, and the 6.2 per cent compound annual growth rate from 2013 to 2017, according to an analysis by Boston Consulting Group (BCG) yesterday.

Factor in the effect of a rebounding US dollar and asset values actually declined 1.6 per cent last year, wiping out any gain, said Ms Anna Zakrzewski, global leader of BCG's wealth-management practice.

"For the first time since 2008, we saw wealth growth was negative when you take into account all the factors," she said.

Still, the amount of personal financial wealth sloshing around the world remains enormous: US$206 trillion (S$279.4 trillion), according to BCG's tally.

Although overall growth was down, some regions did well. Increases ranged from 8.9 per cent and 7.1 per cent for Africa and Asia, respectively, to anaemic gains of 0.6 per cent for Western Europe and 0.4 per cent for North America.

The ranks of millionaires continued to swell, rising 2.1 per cent last year to 22.1 million. BCG estimates that by 2023, there will be 27.6 million globally.

Although overall growth was down, some regions did well. Increases ranged from 8.9 per cent and 7.1 per cent for Africa and Asia, respectively, to anaemic gains of 0.6 per cent for Western Europe and 0.4 per cent for North America.

Switzerland boasts the greatest density of millionaires in its adult population at 7.5 per cent, followed by the United States.

From last year to 2023, the global ultra-high net worth crowd will see the fastest increase in their personal wealth, with a compound annual growth rate of 7.8 per cent, BCG projects. The group represents 7 per cent of total wealth, as does the next lower wealth tier - those with US$20 million to US$100 million.

From this year to 2023, wealth worldwide will grow at a compound annual rate of 5.7 per cent, according to BCG. Asia, however, is expected to see wealth rise by a compound annual growth rate of 9.4 per cent to US$58.2 trillion by 2023.

Latin American wealth is projected to expand 8.2 per cent during that period, while Africa and the Middle East combined are expected to climb 7.7 per cent.

Estimates of how much money sits in offshore centres vary, but BCG estimates that US$8.7 trillion of the world's wealth crosses borders. Over the past five years, that pool of money has been expanding by 5 per cent a year.

Over the next five years, China will account for roughly a third of the flows into offshore financial centres, with most of it likely to end up in Hong Kong and Singapore, Ms Zakrzewski said.

The two cities, and perhaps the US and United Arab Emirates, "have the strongest exposure to growth markets as offshore financial centres", and should expand at annual compound rates of 7 per cent to 8 per cent, she said.

Asia's total personal wealth is expected to reach US$58 trillion by 2023, which would leapfrog it over Western Europe's projected US$53 trillion.

The group of affluent people is set to grow at 6.2 per cent over the next five years. While that is still slower than the increase of billionaires, it is higher than the increase in global wealth.

People with assets of US$250,000 to US$1 million are set to become a new battleground for the world's financial firms as declining margins push them to seek out pockets of wealth further down the scale.

About 76 million people with US$18 trillion sit in that range today and another four million are joining the group each year, according to BCG.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 21, 2019, with the headline 'Global personal wealth up at slowest rate in 5 years: Study'. Print Edition | Subscribe