Market Research

UBS Report Shows Wealth Growth

Amanda Cheesley Deputy Editor 11 July 2024

UBS Report Shows Wealth Growth

UBS has released a new report this week revealing how wealth growth across the world has recovered from its slump in 2022.

The world has been getting progressively richer across all wealth segments, according to the latest global wealth report by UBS.

Last year, global wealth rebounded from its 2022 slump, the report shows. Wealth is steadily growing throughout the world – albeit at different speeds – with very few exceptions. The proportion of people in the world in the lowest wealth bracket has shrunk since 2008, while the proportion of people in every other wealth bracket has grown. The percentage of adults in that lowest wealth band, below $10,000, nearly halved between 2000 and 2023. Most of these people moved up into the considerably wider second band, between $10,000 and $100,000, which more than doubled. And people are now three times as likely to have wealth exceeding $1 million, the report shows.

The report came out a day after Boston Consulting Group issued a report giving the same overall picture of how rising markets in 2023 lifted global wealth.

Wealth mobility has been upward
UBS’s analysis shows that household wealth over the past 30 years has seen a substantial share of people in its sample markets move between wealth brackets in their lifetime. In every wealth band and over any time horizon, it is consistently likelier for people to climb up the wealth ladder than slip down it. In fact, the analysis shows that about one in three individuals moves into a higher wealth band within a decade. And, while extreme movements up and down the ladder are uncommon, they are not unheard of. Even leaps from the bottom to the top are a reality for a part of the population, the report states.

The likelihood of becoming richer tends to decrease over time, however. UBS’s analysis shows that the longer it takes adults to gain appreciably in wealth, the slower the increase tends to be in future years.

A great horizontal wealth transfer is also under way, the report reveals. In many couples, one partner is younger than the other, and generally speaking, women outlive men by just over four years on average, irrespective of a given region’s average life expectancy. This means that intra-generational inheritance often comes before inter-generational wealth transfer. As the analysis shows, the inheriting spouse can be expected to hold on to this wealth for four years on average before passing it on to the next generation.

UBS’s analysis also shows that $83.5 trillion of wealth will be transferred within the next 20 to 25 years. UBS estimates that $9 trillion of this will be shifted horizontally between spouses, the majority in the Americas. Over 10 per cent of the total $83.5 trillion is likely to be transferred to the next generation by women. The number of millionaires is on track to keep growing, the report states. In 2023, millionaires already accounted for 1.5 per cent of the adult population UBS analysed. The US had the highest number, at nearly 22 million people (or 38 per cent of the total). Mainland China was in second place with just over six million – roughly double the number of the UK, which came third.

By 2028, the number of adults with wealth of over $1 million will have risen in 52 of the 56 markets in the sample, according to UBS’s estimates. In at least one market – Taiwan – this increase may reach 50 per cent. Two notable exceptions are expected to be the UK and the Netherlands. The wealth bounceback is powered by Europe, the Middle East and Africa. This rebound was led most strongly by growth in Europe, the Middle East and Africa (EMEA). Notably, while the global downturn in wealth in 2022 was mostly caused by the strength of the dollar, last year wealth bounced back above 2021 levels, even when measured in local currencies.

Since 2008, apparently fuelled by debt wealth in Asia-Pacific, it has grown the most – by nearly 177 per cent – since UBS published its first global wealth report 15 years ago. The Americas come in second, at nearly 146 per cent, while EMEA lags far behind at just under 44 per cent, the report reveals. Asia-Pacific’s growth in both financial and non-financial wealth has, notably, been accompanied by a significant spike in debt. Total debt in this region has grown by over 192 per cent since 2008 – more than 20 times than in EMEA and more than four times than in the Americas.

US wealth continues to be buoyant
The US is one of very few markets in UBS’s sample where wealth growth has accelerated since 2010 compared with the decade before. In the US, as in the UK, wealth has grown evenly across all wealth brackets.

UBS’s analysis reveals that wealth inequality has fallen slightly in the US since 2008; in 2023 the country was home to the highest number of millionaires. Latin America growth is strong, but inequality is ever present; Brazil’s average wealth per adult has grown by over 375 per cent since the financial crisis of 2008, when measured in local currency. This is more than double Mexico’s growth of just over 150 per cent and more than mainland China’s 366 per cent. However, Brazil has the third-highest rate of wealth inequality in UBS’s sample of 56 countries, behind Russia and South Africa.

Adults in EMEA are the wealthiest on average, but their wealth is growing the slowest. EMEA enjoys the highest wealth per adult in dollar terms, at just over $166,000, followed by APAC, with slightly over $156,000, and the Americas, with $146,000.

Growth in average wealth per adult since 2008, expressed in dollars, also shows a different picture. EMEA comes bottom with 41 per cent, compared with 110 per cent in the Americas and 122 per cent in APAC, the report reveals.

Looking ahead, UBS expects wealth per adult to keep growing in almost all markets in its sample. UBS forecasts emerging markets’ share of global wealth to break through the 30 per cent barrier in 2024. In some markets, the number of millionaires will increase by up to 50 per cent over the next five years, according to UBS’s estimates.

The generally positive performance of financial markets across much of the world in recent years is one reason behind the growth in millionaires in UBS’s sample of markets, but it is far from being the only one. As most asset classes have seen their value rise over the past few years, the effect of steady economic growth is instrumental in the increase in millionaires. This applies to the past as much as it does to future projections.

UBS has looked ahead to 2028, estimating how global wealth may be evolving in the years to come. Its outlook suggests that in 2024 the emerging economies’ share of global wealth will break through the 30 per cent mark, rising to nearly 32 per cent by 2028, and that the percentage of adults in the lowest wealth bracket will decline further in the next five years.

UBS expects that by 2028, the number of adults with wealth of over one million will have risen in 52 out of the 56 markets in its sample. In Japan and Korea, UBS estimates that the number of millionaires will increase by over 25 per cent, and in Taiwan by almost 50 per cent. While UBS expects organic growth in wealth to account for some of this stark increase in millionaires, mainly thanks to Taiwan’s microchip industry which is set to reap the rewards of the boom in artificial intelligence, a substantial chunk is due to come from immigration by wealthy foreigners.

By 2028, the number of adults with wealth of over $1 million will have risen in 52 out of the 56 markets in UBS’s sample.

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