Global household wealth experienced a significant decline in 2022, marking the first time since the financial crisis of 2008.
The Global Wealth Report 2023 reveals that total net private wealth fell by 2.4% to USD 454.4 trillion, while wealth per adult dropped by 3.6% to USD 84,718 at the end of 2022. This decline can be attributed to factors such as a stronger US dollar, elevated inflation rates, and a reduction in the value of financial assets.
Inflation alone is estimated to have reduced wealth growth by 6.0%. The persistent inflationary environment, along with geopolitical tensions and fiscal and monetary policies implemented in response to the pandemic, has had profound implications for global wealth. The appreciation of the US dollar against other currencies also contributed to the overall decline in global wealth.
Despite the decline in financial assets, non-financial assets, particularly real estate, showed resilience. However, higher interest rates in 2023 are expected to exert downward pressure on house prices.
The report also highlights a reversal in the rise of wealth inequality observed during the pandemic, with a decrease in the number of US dollar millionaires worldwide.
However, projections for global wealth over the next five years appear optimistic, with a forecasted 38% increase and a rise in wealth per adult to USD 110,270 by 2027. Middle-income countries are expected to play a crucial role in shaping global wealth trends. The anticipated recovery in global wealth underscores the resilience of the financial system and the potential for renewed growth in the coming years.