Top 1% population owns 50% of world’s household wealth: Credit Suisse

New Delhi,Ruchika Shah: According to a recent report released by Credit Suisse, the top 1% of the world’s population now owns 50% of household wealth around the globe.

Representational image

The Global Wealth Report, as it is called, in its sixth edition noted that while strong growth in household wealth was evident in the US and China, world’s wealth saw a decline overall by $12.4 trillion due to currency value of various economies depreciating against the firm US dollar.

In the year to mid-2015, the report says that US topped the list of adding to household wealth, adding $4.6 trillion. “This continues a remarkable streak since the financial crisis, which has seen seven successive years of wealth gains and new record levels of household net worth for the past three years,” the report said.

China, on the other hand, despite the slowdown and market rout, added $1.5 trillion in household wealth in the same period.

However, the report notes, that despite addition to household wealth around the world was largely stable and positive, its value in domestic currencies was offset by the strength of the US dollar. “As a consequence, total global wealth, which would have risen by $13 trillion between mid-2014 and mid-2015 if valued at constant exchange rates, fell instead by $12.4 trillion,” the report says.

Total global wealth as a result, at $250.1 trillion was just slightly ahead of the $250 trillion threshold that was crossed for the first time in 2013.

It is interesting to note that amid the debt crisis, Europe contributed to an aggregate loss of $10.7 billion, nearly double than the $5.4 trillion loss posted by the Asia-Pacific region, excluding China and India.

The report says that losses recorded by each country or region are negligible if the value is determined by keeping the exchange rate constant, as against the current exchange rate.

In India, as the table shows, the small loss recorded due to a depreciating rupee against the greenback, translates into gains when the exchange rate is kept constant.

Keeping this in mind, the report says that a decline in the world’s household wealth shouldn’t be given much importance neither should its consequences be pondered upon much, as the prevalent scenario of firm dollar against other currencies may “well be reversed in the future”.

The inequal wealth distribution brought forward by the Credit Suisse report is evident in the chart below showing a region’s contribution to global wealth vis-a-vis the adult population in the region.

India that accounts for about 17% of the world’s wealth, has less than 5% adult population, while North America and Europe’s cumulative (nearly) 65% of global wealth accounts for 6% and 12% approximately, in adult population.

In India, the report says that wealth grew rapidly since 2000 barring during the financial crisis. Between 2000-2005, annual growth of wealth per adult in rupee terms averaged at 8%, the report says.

Like most developing countries, property and real estate makes up for most personal wealth in India. It accounts for 86% of estimated houseld assets. In India, personal debt only accounts for an estimated $346.

The report notes that even though wealth has been growing steadily in India, with the middle class and the rich getting richer, there is still widespread poverty in the country. The report says, “this is reflected in the fact that 95% of the adult population has wealth below $10,000.”

On the other hand, only about 0.3% of the population accounts for net worth over $1,00,000. However, this translates into 2.4 million people.

India has 2,54,000 members of the top 1% of global wealth holders, which equates to a 0.5% share, the report says.

“We estimate that 2,080 adults have wealth over $50 million and 940 people own more than $100 million.”

Posted by on October 20, 2015. Filed under Editorial. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.