Global wealth rebounded by 4.2% in 2023

Average wealth growth per adult rose by nearly 6% in the UAE last year, according to UBS report

Millionaires accounted for 1.5 per cent of the adult population last year, according to the UBS report. AFP

Global wealth grew by 4.2 per cent in 2023 and was driven by growth in Europe, the Middle East and Africa (Emea) and Asia-Pacific, according to a new report by Swiss banking group UBS.

This was in contrast to a 3 per cent contraction in wealth growth in 2022, largely attributable to a strong US dollar, UBS’s Global Wealth Report 2024 said.

“The world is getting progressively richer across all wealth segments. And the dip we saw in global wealth in 2022 appears to have been just a blip,” according to the report, which analysed 56 markets representing more than 92 per cent of the world’s wealth in 2022.

“Wealth is steadily growing throughout the world – albeit at different speeds – with very few exceptions. The proportion of people in the world in the lowest wealth bracket [under $10,000] has shrunk since 2008, while the proportion of people in every other wealth bracket has grown.”

Adults in the Emea region were the wealthiest on average ($166,000), followed by Asia-Pacific ($156,000) and the Americas ($146,000), but their average wealth grew at the slowest pace since 2008 at around 41 per cent compared with 122 per cent in APAC and 110 per cent in the Americas in the same time frame, the report found.

In 2020, the Covid-19 pandemic tipped the world economy into its worst recession since the Great Depression, forcing countries into lockdowns that led to higher unemployment and reduced salaries.

However, the generous financial support given to households by governments in many advanced countries and monetary support measures introduced by central banks, coupled with lower interest rates and limits on consumption opportunities, boosted household wealth throughout the world.

Global wealth declined by 4 per cent to $255 trillion in 2022 due to the largest stock market fall since 2008, according to a report by the Boston Consulting Group last year.

However, it is expected to grow at a compound annual rate of 5.3 per cent to $329 trillion by the end of 2027, the BCG report said.

In the Gulf region, average wealth growth per adult fell by almost 2 per cent in Saudi Arabia while it rose by nearly 6 per cent in the UAE last year, according to the UBS report.

"Wealth in the UAE grew broadly in line with the global average amid robust economic growth and a trend among the wealthy to pick the country as their base," said Samuel Adams, economist with UBS Global Wealth Management.

Since 2008, Saudi Arabia leads with a wealth growth rate of more than 85 per cent, more than double that of the UAE at slightly under 33 per cent, the report identified.

“In Saudi Arabia, median wealth growth since 2008 was about twice as strong as average growth, breaking through the 170 per cent barrier, and in the UAE, it was almost three times as strong, at close to 87 per cent,” the UBS study said.

“This suggests that individuals in lower wealth brackets saw their fortunes rise at a much faster rate than their compatriots in upper wealth brackets.”

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Financial assets make up between 57 per cent and 62 per cent of gross wealth in the UAE and Saudi Arabia, while the share of debt is exceptionally low, at just over 9 per cent in the Emirates and below 6 per cent in the kingdom. By comparison, the average debt for Emea is 15.7 per cent.

Millionaires accounted for 1.5 per cent of the adult population last year.

Presently, the US (22 million), followed by China with over 6 million – roughly double that of third placed UK – have the highest number of USD millionaires. The US accounts for 38 per cent of global millionaires, the report identified.

Looking ahead to 2028, the Swiss lender estimated the number of individuals with assets above $1 million to rise by 15 per cent in both the UAE and Saudi Arabia, equivalent to a total increase of roughly 80,000 people compared with 2023.

On an individual market level, Switzerland continued to top the list for average wealth per adult, followed by Luxembourg, Hong Kong and the US, the research revealed.

The biggest wealth increases in 2023 occurred in Turkey, Qatar and Russia, with Turkey leaving all others behind with a growth of 157 per cent.

The UBS report also projected that $83.5 trillion of inherited wealth is expected to be passed on within the next two decades.

“A notable amount of this wealth will move horizontally or intra-generationally between spouses first, before moving to the next generation. In practice, this means a considerable transfer of wealth to women, considering their comparatively higher life expectancy,” it said.

“We estimate $9 trillion of this will be shifted horizontally between spouses, the majority in the Americas. Over 10 per cent of the total $83.5 trillion is likely to be transferred to the next generation by women.”