Friday 3 December 2021

UAE’s wealth per adult grew by 1.2 per cent since last year.

Mena wealth grows by over $2.2trn since 2000

DUBAI, December 5, 2017

Total wealth in the Mena region grew by $2.221 trillion or 156 per cent since 2000, above the global average of 140 per cent, according to Credit Suisse Research Institute’s 2017 Global Wealth Report.

In the next five years household net wealth in the Mena region is expected to increase by a further 52 per cent, or nearly 8.8 per cent annually.

In the Mena region wealth per adult net of debt increased by 1.9 per cent from mid-2016 tomid-2017 compared to the global average 6.4 per cent. Qatar recorded the highest wealth per adult of $102,517 in mid-2017, while Kuwait followed closely with $97,300.

However, while Kuwait saw its wealth per adult increase marginally by 1.4 per cent, Qatar witnessed a marginal drop of 0.2 per cent from mid last year.

UAE placed third in the region with wealth per adult of $78,800, grew by 1.2 per cent since last year. Wealth per adult in Bahrain saw a steady increase of 2.7 per cent from mid last year to $30,800.

Wealth per adult in Saudi Arabia, the largest economy in the region, grew by 2.8 per cent touching $35, 000while Egypt’s wealth per adult saw a massive drop of 50.2 per cent touching $3,200 pulled down by a drop in value of the Egyptian pound against the USD.

However, in terms of total wealth (net of household wealth), Saudi Arabia ranked first with an estimated wealth of $772 billion, closely followed by the UAE with an estimated wealth of $603 billion. Kuwait and Qatar’s total wealth is estimated to be $292 billion and 218 billion respectively. Bahrain's net household wealth is estimated at $34 billion. Egypt’s total wealth declined to $178 billion this year, having peaked at $511 billion in 2010.

Global scenario

Ten years from the onset of the global financial crisis, global wealth has grown by 30 per cent, the report said.

In the 12 months to mid-2017, global wealth grew at a faster pace than in recent years, with mean wealth per adult reaching a new record high.
According to the eighth edition of the Global Wealth Report, in the year to mid-2017, total global wealth rose at a rate of 6.4 per cent, the fastest pace since 2012 and reached $280 trillion, a gain of $16.7 trillion.

This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9 per cent and reached a new record high of $56,540 per adult.

Urs Rohner, chairman of the Credit Suisse Research Institute and chairman of Credit Suisse Group, said: “A decade since the start of the global financial crisis, we see a significant increase in wealth across all regions of the world. In our home market, Switzerland, wealth per adult has increased by more than 40 per cent during this period and continues to lead the global rankings. In this year’s edition of the Credit Suisse Research Institute’s annual Global Wealth Report, we explore the wealth prospects of the Millennial generation, which emerges from a more challenging period than its predecessors.”

Key findings

•    This year’s report focuses in on Millennials and their wealth accumulation prospects. Overall the data point to a “Millennial disadvantage”, comprising among others tighter mortgage rules, growing house prices, increased income inequality and lower income mobility, which holds back wealth accumulation by young workers and savers in many countries. However, bright spots remain, with a recent upsurge in the number of Forbes billionaires below the age of 30 and a more positive picture in China and other emerging markets.

•    The US continued its unbroken spell of gains since the financial crisis, bolstered by strong market conditions. It added $8.5 trillion to the stock of global wealth, which is half of the wealth generated globally over the 12 months to mid-2017.

•    Stability in Europe enabled wealth growth of 6.4 per cent across the continent, in line with global wealth growth. Four Eurozone countries (Germany, France, Italy, Spain) made it to the top ten countries with the biggest gains in absolute terms. The UK market recovered after the losses caused by the Brexit vote last year but the outlook remains uncertain.

•    Switzerland once again ranked as the global leader in terms of both average and median wealth per adult in 2017.

•    Median wealth has risen in most regions, while remaining below the peak level of 2007. Only China has reached a new median wealth high. The top ten ranking by median wealth corresponds closely to the ranking by mean wealth, although lower-than-average inequality promotes Italy and Japan to a place among the top ten.

•    In the mid-term, emerging economies are expected to generate wealth at a more dynamic pace than their developed peers.

•    Among the wealth components, only financial assets are noticeably up since 2007; non-financial assets moved above the 2007 level for the first time this year and are now 2 per cent higher.

•    This century, debt grew at a fast pace (9 per cent) until the financial crises, but has been flat since then, never gaining the peak value achieved in 2007. Debt per adult is currently 3 per cent below the level of 2007.

US led the gains in global wealth

Economic activity and US financial markets continued to perform well in the past year, driving a ninth successive year of rising wealth.

The US managed to add to the stock of global wealth $8.5 trillion, half of the total world’s gain of the last 12 months, driven primarily by stronger financial assets. Comparing wealth gains across countries, the US was restored to its usual first place, with a gain five times the rise recorded by China ($1.7 trillion) in second place.

Today the country’s wealth is estimated at around $93.6 trillion, equivalent to 33 per cent of total global wealth. The US contributes the highest number of members of the top 1 per cent global wealth group, and currently accounts for 43 per cent of the world’s millionaires. Is this growth pace sustainable?

“So far, the Trump Presidency has seen businesses flourish and employment grow, though the ongoing supportive role played by the Federal Reserve has undoubtedly played a part here as well, and wealth inequality remains a prominent issue,” commented Michael O’Sullivan, CIO for International Wealth Management at Credit Suisse. “Looking ahead, however, high market valuations and property prices may curb the pace of growth in future years.”

Switzerland still tops the ranking of the average wealth per adult. Since the turn of the century, wealth per adult in Switzerland has risen by 130 per cent to $537,600, largely associated with the appreciation of the Swiss franc against the US dollar between 2001 and 2013. The top ten in the wealth-per-adult league in 2017 also include five other European countries: Norway, Denmark, Belgium, the UK and France.

The Eurozone’s total wealth of $53 trillion in 2017 is comparable to the total wealth of the US at the end of the 1990s.

Trends in the number of millionaires

The number of millionaires globally has increased by 170 per cent, while the number of ultra-high net worth individuals (UHNWI) has risen five-fold, making them by far the fastest-growing group of wealth holders.

The composition of the millionaire segment is changing fast. In 2000 as many as 98 per cent of millionaires were heavily concentrated in high income economies. Since then, 23.9 million “new millionaires” have been added to the total, of whom 2.7 million – 12 per cent of the total additions – originated from emerging economies.

The transformation is even more remarkable in the UHNWI segment. Emerging economies accounted for 6 per cent of the segment in 2000, but have claimed 22 per cent of the growth in UHNWIs (24,500 adults) since then. China alone added an estimated 17,700 adults – 15 per cent of the new UHNWIs in the world.

By 2022 the number of UHNWIs will likely increase by 45,000 to reach 193,000 individuals.

Wealth outlook for the next five years

According to the report, global wealth should continue to grow at a similar pace to the last half a decade (3.9 per cent expected and 3.8 per cent recorded over last five years), albeit at a slower rate than the previously estimated 5.4 per cent. Based on this updated forecast, global wealth is anticipated to reach $341 trillion by 2022.

Emerging economies are expected to generate wealth at a faster pace than their developed peers and are likely to achieve a 22 per cent share in global wealth at the end of the five-year period. However, the pace of emerging economies’ wealth generation is slower than previously estimated. Unsurprisingly, the strongest contribution is expected from China and is estimated at around $10 trillion, an increase of 33 per cent.

The outlook for the millionaire segment is more optimistic than for the base tier of the wealth pyramid. The former is expected to rise by 22 per cent, from 36 million people today to 44 million in 2022, while the group occupying the lowest tier of the pyramid is expected to shrink only by 4 per cent.

Non-financial wealth will slightly outpace financial wealth by around 1 per cent annually in the next five years. Debt is also expected to grow at a faster pace than both financial and non-financial wealth in the coming years after a period of stability between 2007 and 2010. Household debt is expected to increase by 37 per cent in the next five years to reach 15 per cent of gross assets. – TradeArabia News Service

Tags: Credit Suisse | debt | net worth |

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