Despite the financial crisis that started in 2007, global household wealth increased by $117 trillion between 2000 and 2011. Not only that, it's set to rise by more than 50 percent in the next five years from $231 trillion in 2011 to $345 trillion by 2016. So say the authors of the latest annual Credit Suisse Global Wealth Report 2011 from the Credit Suisse Research Institute.
The report states that net worth per adult should reach $70,700 by 2016, a 40 percent increase on 2011. China is expected to add a total of $18 trillion to the stock of global wealth in the next five years and surpass Japan as the second wealthiest country in the world. The US though, should remain on top of the wealth league with $81 trillion by 2016.
"According to our estimates," the report states, "China will replace Japan as the second wealthiest country in the world, with total household wealth of $39 trillion in 2016, compared to $31 trillion for Japan. The US is expected to maintain its supremacy in the wealth ranking, with a projected total household wealth of $82 trillion. Well behind in fourth and fifth places are France and Germany with $20.1 trillion and 19.6 trillion, respectively."
Over the next five years, the authors of the Global Wealth Report predict a big improvement in the position of emerging economies. Wealth in both China and Africa as a whole is projected to rise by more than 90 percent but India and Brazil are forecast to do even better, with personal wealth more than doubling by 2016.
Using the course of US wealth in the 20th Century as a yardstick, Africa's total wealth of $3 trillion is comparable to total US wealth in 1908. Even though Africa is expected to grow considerably in the next five years, it will rise only to the level of the US in 1928, so the improvement equates to 20 ‘US years'.
In striking contrast, India currently has a total household wealth of $4.1 trillion, which is comparable to the US in 1916. Over the next five years, India is projected to gain as much wealth as the US achieved over 30 years from 1916, bringing it to about $9 trillion.
China currently has $20.1 trillion, equivalent to the US in 1968. If recent trends continue, China will jump ‘22 US years' in the next five years and achieve the wealth level the US reached in 1990.
Who wants to be millionaire?
Focusing on the top tier of the wealth distribution pyramid, the Global Wealth Report authors estimate that the number of global millionaires will rise by 17 million over the next five years to reach a total of nearly 47 million by 2016.
While the number of millionaires in emerging economies will remain well below the levels in the US (12.6 million) or Europe (18.5 million), the report states that the authors expect the process of catching up to be very evident in the next five years (see chart). Here in the UAE, the 40,000 millionaires here is expected to increase by 35 percent to 54,000.
China should more than double its number of millionaires to about 2.4 million by 2016 and the number in India and Taiwan are both predicted to rise above half a million for the first time.
In Africa, the number of millionaires is expected to treble to 367,000 in 2016, with especially large contributions from South Africa (243,000) and Egypt (92,000). Projections for Latin America suggest a total of 1.4 million millionaires by 2016, led by Brazil with 815,000 and Mexico with 344,000.
The Credit Suisse Global Wealth Report 2011 is published by Credit Suisse AG, Research Institute, Paradplatz 8, CH-8070, Zurich, Switzerland.
The authors are Giles Keating, Michael O'Sullivan, Anthony Shorrocks, James B. Davies, Rodrigo Lluberas and Antonios Koutsoukis.
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