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More than 3.5 million people lost their ‘dollar millionaire’ status in 2022 during the first drop in global wealth since the 2008 financial crisis, according to a study.
The number of adults with assets totaling more than $1m (£790,000) fell from 62.9m at the end of 2021 to 59.4m at the end of last year, according to the Global Wealth Report released by Credit Swiss and UBS.
The number of millionaires in the US fell by 1.8 million to 22.7 million, but there are still many more than in any other nation, while in the UK the number fell by 440,000 to 2.6 million, the third largest worldwide.
The world’s private wealth fell 2.4 percent to $454.4 trillion at the end of last year, as $11.3 trillion of personal asset value was stripped by high inflation and weak coins.
The invasion of Ukraine was blamed for causing the rise in inflation in 2022.
The number of adults with assets totaling more than $1m (£790,000) fell from 62.9m at the end of 2021 to 59.4m at the end of last year, according to the Global Wealth Report released by Credit Suisse and UBS (File Image)
According to independent research from the Bloomberg Billionaires Index, the world’s 500 richest people lost a total of $1.4 trillion in 2022.
The Credit Suisse and UBS report shows that, measured in current nominal USD, wealth per adult also declined by $3,198 to reach $84,718 per adult.
Much of this decline stems from the appreciation of the US dollar against many other currencies.
Financial assets contributed the most to the decline in wealth in 2022, while non-financial assets (mainly real estate) remained resilient, despite rapidly rising interest rates.
Regionally, the report shows that the global wealth loss was largely concentrated in wealthier regions such as North America and Europe, which together shed $10.9 trillion.
Asia Pacific posted losses of $2.1 trillion.
Latin America saw a total wealth increase of $2.4 trillion, helped by an average currency appreciation of 6 percent against the US dollar.
In terms of losses in market terms in 2022, the United States topped the list, followed by Japan, China, Canada, and Australia.
The largest increases in wealth at the other extreme were recorded in Russia, Mexico, India and Brazil.
In terms of wealth per adult, Switzerland has remained at the top of the list followed by the US, Hong Kong SAR, Australia and Denmark despite sizeable reductions in median wealth compared to 2021.
The world’s private wealth fell 2.4% to $454.4 trillion at the end of last year (File Image)
Along with the decline in aggregate wealth, overall wealth inequality also fell in 2022, with the wealth share of the global 1 percent falling to 44.5 percent.
According to the report’s projections, global wealth will increase by 38% over the next five years, reaching $629 trillion in 2027.
Banks expect global wealth to increase by 38 percent to $629 trillion by 2027. Growth in middle-income markets will be the main driver of global trends.
The number of millionaires will rise to 86 million people.
Nannette Hechler-Fayd’herbe, chief investment officer for EMEA and global head of economics and research at Credit Suisse, said: “Wealth developments have proven resilient during the COVID-19 era and have grown at a record pace through 2021. But inflation, rising interest rates and currency depreciation caused a reversal in 2022.’
Anthony Shorrocks, an economist and author of the report, said: “Much of the decline in wealth in 2022 was due to high inflation and the appreciation of the US dollar against many other currencies.” If exchange rates were held constant in 2021, total wealth would have increased by 3.4% and wealth per adult by 2.2% during 2022.
‘This remains the slowest increase in wealth at constant exchange rates since 2008. Holding exchange rates constant but accounting for the effects of inflation results in a real wealth loss of -2.6% in 2022.
‘Similarly, financial assets were the largest contributors to the decline in wealth, while non-financial assets (mainly real estate) remained resilient, despite rapidly rising interest rates. But the relative contributions of financial and nonfinancial assets may reverse in 2023 if house prices fall in response to higher interest rates.