How Covid cost every Australian $60,000 in wealth – but huge gains are coming
Australian adults lost wealth worth almost $60,000 in 2022 as world’s economy went into a post-Covid rollercoaster, but massive gains would occur over the next five years, according to a report from UBS.
Global wealth took a massive hit in 2022 (Image: Unsplash)
The report found that about $US1 trillion in wealth was shaved away from Australians in 2022 when the wealth per adult at the end of that year was $US496,819.
It said much of the lost wealth was due to currency values which caused a decline in global wealth of 5.8 per cent. Inflation also increased rapidly which led to increases in interest rates and that hampered economic growth and depressed asset prices.
Share prices also fell “almost everywhere in 2022” which led to a loss of $US19 trillion globally.
Australia had 363,000 fewer millionaires in US dollar terms at the end of 2022 compared with 2021, but it still ranked fourth in wealth per adult.
“Along with a decline in aggregate wealth, overall wealth inequality fell in 2022 with the wealth share of the global top 1 per cent falling to 44.5 per cent,” the report said.
The 2023 edition of the Credit Suisse Global Wealth Report said the year delivered a significant setback in what had been a consistent uptrend in the accumulation of wealth in the household sector. It was a year in which the first fall in net global household wealth since the global financial crisis of 2008 was recorded.
North America and Europe were the biggest losers shedding $US11 trillion. Asia Pacific lost $US2.1 trillion while Latin America increased its wealth through currency appreciation.
However, the countries that lost the most in 2022 were often those that made sizeable gains in 2021.
“For the world as a whole, median wealth has increased five-fold this century at roughly double the pace of wealth per adult, largely due to the rapid wealth growth in China.
“According to our projections, global wealth will rise by 38 per cent over the next five years, reaching $US629 trillion by 2027.
“Growth by middle-income countries will be the primary driver of global trends. We estimate wealth per adult to reach $US110,270 in 2027 and the number of millionaires to reach 86 million while the number of ultra-high-net-worth individuals (UHNWIs) is likely to rise to 372,000 individuals.”
In Australia, the mean wealth per adult was $US496,820 and the median wealth level $US247, 450.
Global median wealth, arguably a more meaningful indicator of how the typical person is faring, did in fact increase by 3% in 2022 in contrast to the 3.6% fall in wealth per adult.
