The globe’s richest one percent own half the world’s wealth, according to a new report highlighting the growing gap between the super-rich and everyone else.
According to the eighth edition of Credit Suisse’s Global Wealth Report published Tuesday, the world’s richest people have seen their share of the globe’s total wealth increase from 42.5 percent at the height of the 2008 financial crisis to 50.1 percent in 2017, or $140tn (£106tn).
At the other end of the spectrum, the world’s 3.5 billion poorest adults each have assets of less than $10,000 (£7,600). Collectively these people, who account for 70 percent of the world’s working age population, account for just 2.7 percent of global wealth.
The report said the poor are mostly found in developing countries, with more than 90 percent of adults in India and Africa having less than $10,000.
“In some low-income countries in Africa, the percentage of the population in this wealth group is close to 100 percent,” the report said.
“For many residents of low-income countries, life membership of the base tier is the norm rather than the exception.”
The report equally indicated that in the year to mid-2017, total global wealth rose at a rate of 6.4 percent, the fastest pace since 2012 and reached $280 trillion, a gain of $16.7 trillion.
It said the growth 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 percent and reached a new record high of $56,540 per adult.
However, one percent of the world’s richest benefited much from the growth.
“The share of the top 1% has been on an upward path ever since [the crisis], passing the 2000 level in 2013 and achieving new peaks every year thereafter,” the annual report said. The bank said “global wealth inequality has certainly been high and rising in the post-crisis period,” the report noted.
The Credit Suisse researchers said the increase in wealth among the already very rich led to the creation of 2.3 million new dollar millionaires over the past year, taking the total to 36 million.
“The number of millionaires, which fell in 2008, recovered fast after the financial crisis, and is now nearly three times the 2000 figure,” Credit Suisse said.
These millionaires – who account for 0.7 percent of the world’s adult population – control 46 percent of total global wealth that now stands at $280 trillion.
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.
Meanwhile at the top of what Credit Suisse calls the “global wealth pyramid”, the 36 million people with at least $1m of wealth are collectively worth $128.7tn. More than two-fifths of the world’s millionaires live in the US, followed by Japan with 7 percent and the UK with 6 percent.
However, the collapse in the value of the pound since the Brexit vote meant the total number of dollar millionaires in the UK fell by 34,000 to 2.19 million. Just over half of the UK’s 51 million adults have wealth in excess of $100,000. The mean average wealth of a UK adult is $278,038, but the median is $102,641.
While the global population of millionaires has grown considerably, the number of ultra-high net worth individuals (UHNWIs) – those with a net worth of $50m or more – has increased even faster.
“The number of millionaires has increased by 170 percent [since 2000], while the number of UHNWIs has risen five-fold, making them by far the fastest-growing group of wealth-holders,” the report said.
Most of the new UHNWIs have been created in the US, but 22 percent come from emerging economies, notably China.
The biggest losers, the report says, are young people who should not expect to become as rich as their parents. “Those with low wealth tend to be disproportionately found among the younger age groups, who have had little chance to accumulate assets,” Urs Rohner, Credit Suisse’s chairman, said. “But we find that millennials face particularly challenging circumstances.”
Rohner, who is paid SFr4m (£3m), said millennials have been dealt a series of blows including high unemployment, tighter mortgage rules, increased income inequality and reduced pensions. “With baby boomers occupying most of the top jobs and much of the housing, millennials are doing less well than their parents at the same age, especially in relation to income, home ownership and other dimensions of well-being assessed in this report.”
He said that millennials are much more educated than their parents. But he added: “We expect only a minority of high achievers and those in high demand sectors such a s technology or finance to effectively overcome the ‘millennial disadvantage’.”
Oxfam said Credit Suisse’s research showed that politicians need to do more to tackle the “huge gulf between the haves and the have-nots”.
“In the UK, the wealthiest 1% have seen their share increase to nearly a quarter of all the country’s wealth, while the poorest half have less than 5%,” Oxfam’s head of advocacy, Katy Chakrabortty, said. “This divide matters hugely at a time when millions of people across the UK face a daily struggle to make ends meet and the numbers living in poverty are the highest for almost 20 years.
Frontpage October 23, 2019