Household wealth remains stable despite the pandemic, Credit Suisse says

Global wealth rebounded from an initial slump in the first quarter of the year, adding $1tn by June after ending 2019 at $399.2tn

Global wealth creation is expected to rebound next year as the economy recovers. Alamy

The pandemic that’s led to more than 1 million deaths globally has also led to a decline in individual wealth, yet household wealth largely held up and even increased in China and India.

That’s one of the main findings in Credit Suisse Group’s 2020 Global Wealth Report released on Thursday. Thanks to government and central-bank actions to mitigate the Covid-19 fallout, global wealth rebounded from an initial slump in the first quarter of the year, adding $1 trillion by June after ending 2019 at $399.2tn.

“Given the damage inflicted by Covid-19 on the global economy, it seems remarkable that household wealth has emerged relatively unscathed,” said economist Anthony Shorrocks, one of the report’s authors, adding as a caveat that the findings are based on provisional household balance sheets for the second quarter issued by few countries.

Global wealth creation is expected to rebound next year as the economy recovers. The “main outlier” is North America, the report says, where the economy is hobbled by the “continued weakness due to the high prevalence of Covid-19” in the US. The region’s wealth per adult is projected to drop 5 per cent this year, and remain near that level in 2021.

Only China and India saw gains in household wealth in the first half of the year, growing by 4.4 per cent and 1.6 per cent, respectively. Latin America suffered the most, with a 13 per cent plunge, as currency devaluations aggravated losses in gross domestic product.

Wealth per adult slipped to an average $76,984 from $77,309 at the start of the year, the report found. Switzerland, the Netherlands, Taipei and Hong Kong saw gains, while Norway and the UK posted the biggest declines.

The number of millionaires remained stable after soaring to 51.9 million last year, while the club of the ultra-high net worth individuals with more than $50 million in net assets lost only 120 members to 175,570. In the US, which has the most people in the top 1 per cent wealth group and 39 per cent of the world’s millionaires, the inequality gap has narrowed, according to the report.

The findings come as wealth gains, especially in the US tech world, have been increasingly scrutinised as millions lost their jobs due to the coronavirus hit. Amazon’s Jeff Bezos - the world’s richest person - has amassed more than $73 billion this year, taking his fortune to $188bn, according to the Bloomberg billionaires Index. Facebook’s Mark Zuckerberg has gained $27bn to more than $105bn, while the rise of Zoom Video Communications has pushed up chairman Eric Yuan’s net worth by $22bn.

Overall, the world’s 500 richest people have added $970bn to their combined wealth this year, the Bloomberg index shows.

The top 1 per cent of the world, with more than $1m each, hold 43 per cent of global wealth, the report concludes. Meanwhile, about 2.8 billion adults have less than $10,000, collectively owning just 1.4 per cent of global wealth.

Female workers, millennials and minorities were hit the most by the pandemic, mainly because of their high representation in businesses such as restaurants, hotels and retail that have been badly affected. Millennials, which also suffered the repercussions from the financial crisis, and the next post-Covid generation will have to deal with reduced economic activity and globalisation, as well as discouraged travel, Credit Suisse said.

“There is the promise of many more surprises to come,” said Nannette Hechler-Fayd’herbe, Credit Suisse’s chief investment officer for international wealth management and global head of the economics and research unit. “Among the major economies, China is likely to be the clear winner.”