UBS report: Global millionaires decreased by 3.5 million last year | Global millionaires | Last year | UBS report

UBS Group and Credit Suisse jointly released the 2023 Global Wealth Report on the 15th, stating that last year, due to high inflation, rising interest rates, and a strengthening US dollar in multiple countries, global private wealth decreased by $11.3 trillion and the number of millionaires decreased by 3.5 million.

However, another indicator reflecting the economic level of ordinary people - the median global wealth has increased, and the wealth gap has narrowed accordingly. The report predicts that global private wealth will show an upward trend over the next five years, led by middle-income economies.

Wealth shrinkage

Considering that UBS acquired Credit Suisse in June this year, this is the first time that two financial institutions have jointly released a Global Wealth Report. This report is based on the wealth holdings of 5.4 billion people in nearly 200 economies worldwide, and defines "wealth" as the value of a household's assets minus debt, measured in US dollars.

Overall, global private wealth decreased by $11.3 trillion to $454.4 trillion last year, a decrease of 2.4%. The per capita wealth decreased by $3198 to around $84000, a decrease of 3.6%.

"This result indicates that the almost uninterrupted expansion of household wealth in this century has been interrupted." The report states that since the 2008 international financial crisis, global household wealth has shrunk for the first time.

From a class perspective, last year, the number of millionaires decreased by 3.5 million year-on-year, to 59.4 million. Meanwhile, the number of ultra-high net worth individuals decreased by 22500 to 243000.

The United States has suffered more losses from wealthy individuals, including nearly 1.8 million millionaires and 17000 ultra-high net worth individuals. Public opinion has noticed that the assets of this group are more susceptible to the volatility of financial markets, as ordinary people do not have as much money to invest in.

For example, the net assets of the world's richest man and American entrepreneur Elon Musk decreased by nearly $182 billion last year, and he acquired Twitter for $44 billion the same year. At the same time, Mark Zuckerberg, another American Internet giant, lost nearly 81 billion dollars in net assets.

In addition, Japan, the United Kingdom, and Australia have also lost a significant number of millionaires. But the report also found that the current number of millionaires is four times higher than at the turn of the century.

Last year, the median global wealth, which reflects the economic level of ordinary people, increased by 3%. The report states that globally, the median growth of private wealth in this century has increased fivefold, largely due to the rapid growth of the Chinese economy.

In short, last year the wealth of wealthy people suffered certain losses, while the wealth of ordinary people was boosted to a certain extent. This decrease and increase means that the wealth gap has narrowed, although it is still a gap. The report shows that the wealthiest 1% of the world's population still holds 44.5% of global wealth, although this proportion is slightly lower than 45.6% in 2021.

From a regional perspective, the phenomenon of private wealth shrinkage is more prominent in North America and Europe, with a total shrinkage of $10.9 trillion.

However, there are still some countries and regions where private wealth shows resilience. The report states that despite the impact of sanctions, Russia added 56 millionaires last year. Latin America also performed well, with private wealth increasing by $2.4 trillion, thanks to an average appreciation of 6% in the local currency against the US dollar.

Economist and report author Anthony Sholox said that the main reasons for the global private wealth decline last year were high inflation and a strengthening US dollar. If calculated based on the exchange rate in 2021, global private wealth increased by 3.4% and per capita wealth increased by 2.2% last year.

Sholox also stated that compared to non-financial assets such as real estate, financial assets such as stocks and bonds have a particularly significant impact on the shrinkage of private wealth. He explained that despite the rapid rise in interest rates in most major economies, housing prices remain resilient.

Sholox also said that if housing prices continue to fall due to rising interest rates, the role played by financial and non-financial assets in influencing private wealth may reverse in 2023.

Opportunities and Challenges

Although the wealth outlook for 2022 appears bleak, the report shows an optimistic outlook. By 2027, global private wealth is expected to grow by 38%, reaching $629 trillion. The number of millionaires worldwide is expected to increase to 86 million, and the number of ultra-high net worth individuals is expected to increase to 372000. The per capita wealth is expected to increase by 30%, reaching around 110000 US dollars.

It is worth noting that middle-income economies are expected to become the main driving force behind the global trend of private wealth growth. The economic growth of middle-income economies also helps to narrow the global wealth gap.

Based on the present and looking to the future, UBS Chief Economist Paul Donovan noticed that the opportunities and challenges faced by global economic growth - the fourth industrial revolution driven by advanced technologies such as artificial intelligence - are disrupting and reshaping the socio-economic landscape.

"The global economy is undergoing an astonishing period of transformation. The enormous changes brought about by the Fourth Industrial Revolution represent the most dramatic structural upheaval in 250 years. It has been proven that revolution is revolutionary, and social and economic relations will be challenged by this process."