Anthony Sharrocks sees a veritable “wealth explosion”. For years, the British development economist has been analyzing how mankind’s money and goods are multiplying on behalf of the Swiss investment bank Credit Suisse for their “Global Wealth Report”. However, the past year has surpassed anything he has seen before. “It was an exceptional year.”
Global wealth grew by $41.4 trillion in 2021, reaching $453.6 trillion. Statistically, every adult on earth has 87,489 dollars – but this already shows that these global figures mean little.
On the one hand, property is distributed very unequally, between countries and also within states. On the other hand, only the consideration of the details provides some unexpected insights, especially in Germany. And finally, the trend is likely to change significantly in the coming years due to inflation.
In the past year, however, almost everything went perfectly, notes Sharrocks: “The economy was growing, interest rates were low, share prices were rising, so were real estate prices.” This increased global wealth by 9.8 percent.
However, since this is always measured in US dollars, this value is distorted by the sharp rise in the dollar exchange rate. Excluding this effect, the world even saw a 12.7 percent increase in wealth.
However, this increase was distributed very unevenly. Because almost half of it came from the USA alone, exactly 19.5 trillion dollars, more than a quarter from China: 11.2 trillion dollars. Canada follows in third place, far behind with 1.8 trillion. The rest is spread across the rest of the world.
However, it is not surprising that the USA and China are at the top of this list, after all they are also the two countries with the greatest economic output. So the breakdown by wealth growth per capita is far more interesting.
And here, surprisingly, another country is at the top: New Zealand. Assets per capita there increased by 32 percent in 2021 to over $114,000. “This was mainly a consequence of the sharp rise in real estate prices,” explains Sharrocks.
The USA slides down to second place in this ranking. This is also where they end up when looking at average total assets. Switzerland is at the top here with almost 700,000 dollars per capita. Germany, on the other hand, only manages just under $257,000 – 17th place, behind Israel and ahead of Ireland.
However, these apparently enormous differences say little about the actual wealth situation. Because the statistics include both financial and non-financial assets as well as the value of real estate and debts. But it does not take into account the different pension systems.
For example, the claims of the Swiss, like those of most US citizens, lie in financial assets that are included in the statistics. The Germans, on the other hand, usually have these claims against the statutory pension insurance, and these are not shown.
Another value is therefore even more interesting: the median wealth. This is the value at which exactly one half of the population owns more and the other half owns less.
If the median is significantly lower than the average, this indicates a highly unequal distribution, because then a few high values apparently drive up the average value.
The median value in Switzerland is only around 168,000 dollars, i.e. around a quarter of the average value. And in Germany the difference is very similar: an average of $256,990 is compared to a median value of just $60,633.
However, while in Switzerland this can be explained to a large extent by the assets of foreign citizens that are invested there, in Germany it is more due to an unequal distribution within the population, especially between East and West Germany.
When it comes to inequality, however, Germany also stands out in other respects. Global inequality has steadily decreased since 2000. “But since the beginning of the pandemic, it has picked up again,” says Nannette Hechler-Fayd’herbe, chief economist at Credit Suisse.
Since 2020, the share of the top one percent of the global wealth pyramid in total assets has increased significantly again, previously this share had fallen.
In Germany, however, this proportion has been rising steadily since 2008, from 27.2 to 31.7 percent. At the same time, however, the so-called Gini coefficient, which measures inequality in a society, has fallen since then. Sharrocks and Hechler-Fayd’herbe interpret this in such a way that, on the one hand, the very wealthy claim an ever larger part of the cake in this country, while on the other hand, inequality in the rest of the population is decreasing.
The figures for the development of the super-rich in this country also fit in with this. Because the number of those with assets of more than 50 million dollars in this country rose again last year by 1,750 to 9,720, an increase of well over 20 percent, while it fell slightly in Switzerland, for example.
However, all these developments took place in 2021 at a time of relatively moderate inflation. In the last year or so, however, the situation has changed completely. In addition, share prices around the world have mostly fallen this year. “As a result, it could happen that global wealth will shrink for the first time this year in real terms, i.e. after deducting inflation,” says Sharrock.
For the coming years, he expects growth to be within the long-term average of around six percent per year, without inflation. In nominal terms, however, it could be much more, depending on how high inflation rises. “Maybe in a few years everyone will be millionaires,” says Sharrock, “but then a million dollars won’t be worth anything.”
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