Despite the pandemic impact on economies around the world, global household wealth hit a new record last year, primarily due to soaring house prices and rebounding stock markets.
The latest global wealth report by investment giant Credit Suisse showed today that wealth per adult rose 6 per cent last year, to hit a record £57,598.
Total household global wealth grew by 7.4 per cent, from £20.7 trillion to £301.3 trillion, at the end of 2020, although some of this was helped by exchange rates.
The boost to household wealth meant there were 56.1m millionaires worldwide last year, up 5.2m on the previous year.
The study estimated that £12.6 trillion – or 4.4 per cent – was lost from total global household wealth between January and March 2020 at the start of the crisis.
But it said this had already been largely reversed by the end of June, with personal wealth boosted by recovering stock markets and soaring house prices.
Offsetting economic hits
It came as central banks, including the Bank of England, slashed interest rates to historic lows and launched massive money-printing programmes to offset the economic hit from the pandemic, while governments have unleashed huge support schemes.
Anthony Shorrocks, economist and author of the report, said: “Global wealth not only held steady in the face of such turmoil but in fact rapidly increased in the second half of the year.”
“Indeed wealth creation in 2020 appears to have been completely detached from the economic woes resulting from Covid-19,” Shorrocks told City A.M.
“If asset price increases are set aside, then global household wealth may well have fallen.”
Nannette Hechler-Fayd’herbe, chief investment officer of international wealth management and global head of economics and research at Credit Suisse, added: “There is no denying actions taken by governments and central banks to organise massive income transfer programmes to support the individuals and businesses most adversely affected by the pandemic, and by lowering interest rates, have successfully averted a full scale global crisis.”
“The lowering of interest rates by central banks has probably had the greatest impact. It is a major reason why share prices and house prices have flourished, and these translate directly into our valuations of household wealth,” she noted.
North America and Europe
The regional breakdown shows that North America and Europe accounted for the bulk of total wealth gains in 2020, increasing by 12.4 trillion £8.9 trillion and £6.6 trillion, respectively.
China added another £3 trillion and the Asia-Pacific region, excluding China and India, increased by another £3.4 trillion.
But India saw a 4.4 per cent fall in total wealth, while Latin America was the worst-performing region, with an 11.4 per cent drop.
The report found that home-owners and those with large share portfolios benefited the most last year, with rising asset prices largely lining the pockets of late middle age individuals, men, and wealthier groups in general.
Female workers initially suffered the most from the pandemic, partly because of their high representation in hard-hit sectors, such as retail and hospitality, the report added.
It predicts that global wealth will soar by more than a third – 39 per cent – over the next five years to hit £420 trillion by 2025. Wealth per adult is set to jump by 31 per cent, passing the mark of $100,000 (£72,009) within five years.