Global Wealth Shrinks for the First Time Since Lehman

© Provided by CNBC

Sharp swings in the currency markets have taken their toll on overall global wealth, shrinking it for the first time since the global financial crisis.

But while the overall pool of cash has declined, the gap between rich and poor has widened, with the top 1 percent of global wealth holders now in possession of 50 percent of all household assets in the world, according to the annual Credit Suisse global wealth report.

Total wealth has doubled since 2000, with a fivefold rise in China and lower, but still rapid, growth in India according to the research.

“Wealth inequality changes slowly over time, so it is difficult to identify the drivers of these trends. However, the value of financial assets – especially company securities – is likely to be an important factor because wealthier individuals hold a disproportionate share of their assets in financial form,” the report found.

Total global wealth decreased by $12.4 trillion to $250.1 trillion, with the strength of the U.S. dollar weighing on the overall global wealth picture, as when valued in U.S. dollars, net worth fell in every region except China and North America.

The decline is the first time global household wealth has fallen since the economic crisis of 2007-2008, but when stripping out currency headwinds the underlying trend points to net worth growing every year this century, apart from the financial crisis period, the report found.

This dip in overall wealth also hit the number of millionaires, which having climbed from 13.7 million at the turn of the century to 36.1 million in 2014, fell back this year to 33.7 million due to exchange rate effects.

“The rise of 146 percent (in millionaires) since 2000 reflects population growth and the fact that inflation progressively lowers the bar for membership of the millionaire club. Nevertheless, the number of millionaires has still grown significantly after discounting for these factors,” the report authors said.

The U.S. tops the list of countries with wealth rises again, with an increase of $4.6 trillion, falling way short of the $9 billion gained the year before but “substantial” in the global context, according to Credit Suisse.

Wealth also increased in China by a significant $1.5 trillion and in the U.K. by $360 billion. No other country gained more than $100 billion while wealth fell by $100 billion or more in 27 countries and in excess of $500 billion in nine countries.

Some of these bigger fallers, including France, Germany, Italy and Spain – were euro zone countries which exchange rate fluctuations had worked in their favor a year ago.

Australia and Canada also shed more than $1.5 trillion between them and wealth fell substantially again in Japan, this time by $3.5 trillion.

Written by Jenny Cosgrove of CNBC

(Source: CNBC)

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