Global Wealth Report 2024, the fundamentals and the trends

The Global Wealth Report 2024, published by UBS, analyzes the trends and dynamics affecting household wealth around the world. This summary, Global Wealth Report 2024 the fundamentals and the trends, highlights its most notable points. All figures come from the report and describe past results or projections, not guarantees.

Global wealth report 2024 the fundamentals and the trends: recovery since 2022

According to the report, 2023 marked a positive shift in global wealth after a decline in 2022. Global wealth rose 4.2% in US dollar terms. In addition, the EMEA region (Europe, the Middle East and Africa) grew 4.8%. The report links the recovery to steadier markets, the post pandemic rebound and a better investment climate. However, one year of recovery does not by itself signal a lasting trend.

Distribution of wealth

Over the past two decades, the distribution of wealth has changed markedly, the report finds. The share of individuals with wealth below US$10,000 has halved. Meanwhile, the higher wealth brackets have grown significantly.

What does that mean? In other words, more people appear to be reaching higher levels of wealth, partly because asset values rose across several markets. Global wealth inequality, however, shows a different dynamic:

• North America recorded a slight decrease in inequality.
• Certain countries in Asia and Eastern Europe recorded increases in inequality.

As a result, this shift in wealth distribution offers a useful, though partial, indicator of economic and social dynamics at the global level.

Regional performance

• Asia Pacific continues to show the fastest growth in wealth, according to the report, driven by rapid economic expansion and a growing middle class. However, rising personal and corporate debt accompanies that growth, which raises questions about sustainability.
• North America, and the United States in particular, has seen robust wealth growth on the back of strong equity markets and high property values. In contrast, those same drivers can reverse when markets fall. The report also notes that wealth inequality has declined slightly since 2008, which it attributes in part to various socioeconomic policies.
• Western Europe shows mixed economic performance. For instance, Germany and Switzerland continue to see significant increases in wealth. Other countries face stagnation due to challenges such as political instability and a slower post pandemic recovery.

Inflation and currency effects

According to the report, inflation adjusted real wealth growth reached 8.4% in 2023, a significant gain compared with the prior year.

What drove it? The report points mainly to the global decline in inflation rates. In addition, currency fluctuations had a large impact on wealth in countries such as Japan and the United Kingdom. In our view, this growth suggests markets can recover after a difficult year. Of course, inflation and exchange rates can also move against investors.

A gradual slowdown

The report shows a gradual slowdown in global wealth growth. Annual growth averaged 7% between 2000 and 2010, then a little over 4.5% between 2010 and 2023. The report cites market saturation in developed economies and volatility in emerging markets as the main reasons.

What the projections suggest

The report also offers more encouraging projections. For example, it projects a significant rise in the number of people in the higher wealth brackets by 2028. It also expects emerging markets to account for close to 32% of global wealth. That projection assumes continued economic growth and rising asset values in those regions. Therefore, slower growth or falling asset prices could produce very different outcomes.

Finally, the report projects a significant transfer of wealth over the next two to three decades, with US$83 trillion expected to change hands. According to the report, a substantial portion may pass between spouses before it reaches the next generation. In practice, we suggest treating global wealth report 2024 the fundamentals and the trends as background context, not a forecast for any single portfolio.

Activest Wealth Management provides this article for educational purposes only. It does not offer individual investment advice or a recommendation to buy or sell any security. Past performance does not guarantee future results, and projections may not materialize.