Private wealth across the globe jumped by almost 15 per cent to a staggering $152-trillion (U.S.) in 2013, but only a tiny fraction of the world’s population controls the vast majority of the money.
A new study from Boston Consulting Group shows that 42 per cent of the world’s wealth was held by just 1 per cent of households last year. The year before, the top 1 per cent held 39 per cent.
The report measures cash, deposits, stock holdings and other assets, held by households. It doesn’t include business ownership, real estate and luxury goods or collections.
Canada didn’t match the pace of global wealth growth, with the the increase in this country at 8.4 per cent, to $4.4-trillion in 2013. BCG projects that the pace of wealth accumulation in Canada will slow substantially in the coming years, averaging just 2.2 per cent a year between 2013 and 2018.
Like most of the rest of the world, the expansion in wealth in Canada has mainly resulted from the increased value of individuals’ equity holdings, spurred by the rebound in stock markets. These holdings jumped almost 14 per cent in value in 2013 in Canada, while cash deposits and bonds increased by much lower amounts.
The BCG report notes that overall, new wealth creation is shifting toward the Asia-Pacific region, which will be richer than North America and Western Europe – the current regional leaders – by 2018. Among individual countries, China is expected to see a massive 84 per cent increase in wealth between 2013 and 2018, solidifying its hold on second place behind the United States. Russia will see similar growth rates to China, and India will outpace both with growth of almost 130 per cent, BCG says, although it is starting from a much smaller base.
Leilani Farha, executive director of lobby group Canada Without Poverty, said the BCG numbers underline the shocking income inequality that exists around the world, and how it is getting worse. It is “slightly obscene,” she said, that there is “so much wealth in the hands of so few households,” especially when there is so much extreme poverty around the globe.
The shift of wealth to developing countries in Asia could be cause for concern “if it is off the backs of disadvantaged groups or it is being accumulated in ways that deepen poverty,” she said.
Governments must have the resources to ensure that the most disadvantaged have at least an adequate standard of living, she said, and this means ensuring there is a sufficient tax base to support those programs. Indeed, governments have a legal obligation to put in place laws, policies and programs to address income inequality or wealth gaps, she said.
While wealth is not inherently bad, Ms. Farha said, the mere accumulation of wealth “does not make for great nations.”
Canada currently ranks seventh in the world when it comes to millionaire households, with about 384,000. The United States is far out in front of any other country, with more than 7 million millionaire households. (This threshold is measured in U.S. dollars). Globally, the number of millionaire households rose by 20 per cent in 2013 to 16.3 million.
But only 2.9 per cent of Canada’s households are millionaires, a sharp contrast to Qatar, which tops the “millionaire density” list at 17.5 per cent. Switzerland is second when it comes to percentage of millionaires, and Singapore third.
As for what BCG calls “ultra-high-net-worth” households – those with more than $100-million in private financial wealth, the United States has the most with 4,754, followed by Britain at 1,044. Canada comes seventh with 465 people in this category. Hong Kong has the highest proportion of these ultra-rich folks.
Anna Zakrzewski, one of the authors of the BCG report, said that one reason for the dramatic growth in wealth in Asia is the expansion of the upper middle class, a segment that was very small until recently. Asia is also seeing more new wealth creation, rather than just investment growth from existing assets, she said.
The Globe and Mail
Published Tuesday, Jun. 10 2014, 5:45 PM EDT
Last updated Tuesday, Jun. 10 2014, 6:32 PM EDT