Victor Akindele

As countries of the world continue to count their losses to one of the deadliest global pandemic in recent time, a new report by Credit Suisse, shows that more people became millionaires in 2020 as a result of the pandemic.

According to the report, the number of millionaires increased by 5.2 million to 56.1 million globally.

While noting that wealth creation appeared to be “completely detached” from the economic woes of the pandemic, the researchers at Credit Suisse attributed the increase in wealth to recovering stock markets and soaring house prices. They added that lower interest rates and government support programmes had led to a huge transfer of wealth from the public sector to the household sector.

This, however, has widened the gap between the rich and poor adults in 2020 for the world as a whole and also in most countries.

“As a result, an adult now needs more than USD 1 million to belong to the global top 1 per cent. The ultra high net worth (UHNW) group, usually defined as those having investable assets of more than $30 million, added 24 per centmore members, the highest rate of increase since 2003,” the report stated.

Now in its twelfth edition, the Credit Suisse Global Wealth Report is the most comprehensive and up-to-date source of information on global household wealth. The latest report disclosed that wealth creation in 2020 was largely immune to the challenges facing the world due to the actions taken by governments and central banks to mitigate the economic impact of COVID-19.

“Total global wealth grew by 7.4 per cent and wealth per adult rose by 6 per cent to reach another record high of $79,952. Overall, the countries most affected by the pandemic have not fared worse in terms of wealth creation,” the report stated.

Credit Suisse said its total of the number of millionaires might be higher than other organisations’ estimates because it included both investable and non-investable assets, such as owner-occupied homes.

An economist and author of the Global Wealth Report, Anthony Shorrocks, said the pandemic had an acute short-term impact on global markets, but added this was “largely reversed by the end of June 2020”. “Global wealth not only held steady in the face of such turmoil, but in fact rapidly increased in the second half of the year,” he said.

The report also revealed that total global wealth grew by 7.4 per cent last year. Since the start of the 21st Century, the number of people with wealth between $10,000 and $100,000 had more than tripled in size from 507 million in 2000 to 1.7 billion in mid-2020. They said the increase reflected the “growing prosperity of emerging economies, especially China, and the expansion of the middle class in the developing world”.

The regional breakdown of the global wealth change shows that total wealth rose by $12.4 trillion in North America and by $9.2 trillion in Europe. “These two regions accounted for the bulk of the wealth gains in 2020, with China adding another $4.2 trillion and the Asia-Pacific region (excluding China and India) another $4.7 trillion.

“Total wealth scarcely changed in Africa, and exchange rate appreciation accounted for what little change there was. India and Latin America both recorded losses in 2020. Total wealth fell in India by $594 billion, or 4.4 per cent in percentage terms.

“This loss was amplified by exchange rate depreciation: at fixed exchange rates, the loss would have been 2.1 per cent. Latin America appears to have been the worst-performing region, with total wealth dropping by 11.4 per cent or $1.2 trillion. With the major economies stricken by the pandemic, this would not have come as a surprise,” it stated.