Last year saw global wealth decline for the first time in 14 years as rampant inflation ate into the value of people's assets.
The total net wealth of the world's 5.4 billion adults slipped by US$11.3 trillion to US$454.4 trillion in the year to December 2022, marking a decline of 2.4%, UBS and Credit Suisse reported on Tuesday.
Financial assets mainly accounted for the decline, the Swiss banks noted, with the likes of real estate and other holdings remaining resilient “despite rapidly rising interest rates”.
“Much of the decline in wealth in 2022 was driven by high inflation and the appreciation of the US dollar against many other currencies,” author Anthony Shorrocks said.
Had the report been based on constant currency exchange rates, global wealth would have actually increased by 3.4%, he added.
Per adult, average wealth fell by US$3,198 to US$84,718, with wealthier regions such as the United States and Europe hit particularly hard.
“Wealth evolution proved resilient during the COVID-19 era and grew at a record pace during 2021,” Credit Suisse global economic head Nannette Hechler-Fayd’herbe added.
“But, inflation, rising interest rates and currency depreciation caused a reversal in 2022.”
Despite the downturn, which marks the first since the 2008 financial crisis, the Swiss banks tipped global wealth should skyrocket in the years ahead, climbing by 38% come 2027.