People around the world are getting progressively wealthier, and this trend is not limited to those who already possess great wealth. In fact, a new report predicts that upward wealth mobility is expected to become more pronounced by 2030, and further out, signs of a horizontal wealth transfer are emerging.
Wealth growth bounces Back in 2023
In 2023, wealth growth across the world has recovered from its 3 percent contraction the previous year. This contraction in 2022 was largely attributable to currency effects, such as a strong U.S. Dollar. However, the bounce back of 4.2 percent offset the loss from 2022, regardless of whether it is expressed in $ or local currencies, and was driven by growth in Europe, the Middle East and Africa (EMEA) at 4.8 percent, as well as Asia-Pacific (APAC) at 4.4 percent, according to UBS Global Wealth Management. Moreover, as inflation slowed, real growth exceeded nominal growth in 2023, resulting in inflation-adjusted global wealth growing by nearly 8.4 percent.
Slowing pace of wealth growth
Although global wealth has been on a steady upwards trajectory since 2008, the pace of growth has lost steam in almost all markets. The latest edition of the UBS’ Global Wealth Report, now in its 15th year, highlights several regional and demographic themes, including that in 2023, adults in EMEA were the wealthiest on average, followed by APAC and the Americas, but their average wealth grew at the slowest pace since 2008. Overall, wealth has grown fastest in APAC, accompanied by a significant spike in debt.
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Bucking the trend: The U.S.
The report also notes that the United States (U.S.), in particular, has bucked the trend of slowing growth over time, increasing its compound annual growth rate from 4 percent between 2000-2010 to 6 percent between 2010-2023. Additionally, the number of adults with wealth of over $1 million is expected to rise in 52 of the 56 markets analyzed, with a 50 percent growth forecast for Taiwan.
Wealth inequality diminishing in developed economies
According to the UBS report, although inequality has tended to increase over the years in fast-growing markets, it has diminished in several developed mature economies. Globally, the number of adults in the lowest wealth bracket is in constant decline, while all others are steadily expanding. In fact, the analysis shows about one in three individuals moves into a higher wealth band within a decade, and over a 30-year timespan, the chance of escaping the lowest wealth bracket rises to over 60 percent.
Emerging horizontal wealth transfer
Moreover, the report states that roughly $83 trillion are expected to be passed on within the next two decades, which is roughly the equivalent of the value of all the economic activity in the global economy in a single year. An under-explored facet of this transfer is that a notable amount of this wealth will move horizontally between spouses first, before moving to the next generation, leading to a considerable transfer of wealth to women.
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