World Economy

Richest 1% Own 50% of Global Wealth

Richest 1% Own  50% of Global WealthRichest 1% Own  50% of Global Wealth

World wealth has reached a record $263 trillion but is concentrated in fewer hands. The richest one percent have accumulated more wealth, and own almost 50 percent of it, which could trigger recession, according to a new report by Credit Suisse.

The Credit Suisse Global Wealth Report, released Tuesday warns that the “abnormally high wealth income ratios” may spark a recession, as high disparity leads to economic friction, RT reported.

Global wealth has grown to a record $263 trillion in mid-2014, $20.1 trillion more, and an 8.3 percent increase, over mid-2013. Household wealth has more than doubled since 2000, when the same report calculated it at $117 trillion.

According to the  report, a person needs just $3,650 – including the value of equity in their home – to be among the wealthiest half of world citizens. However, more than $77,000 is required to be a member of the top 10% of global wealth holders, and $798,000 to belong to the top 1%.

Leading the money trail is the United States, dubbed ‘Land of Fortunes’ by the report, which again boasts the highest average wealth. It is home to 34.7 percent ($91 trillion) of global wealth. Europe’s portion comes in a close second with 32.4 percent, followed by India and China’s 23.7 percent share, and then the 18.9 percent concentrated in the Asia-Pacific region.

North America has the highest average wealth and is also the world’s leader in GDP, which the report estimates grew by $12.9 billion in 2013.

Wealth in the US and Europe was driven by a rather spectacular year on the stock exchanges. Since the financial crisis of 2008, the US has added $31.5 trillion in household wealth. In the last year alone the stock market increased in value by 22.6 percent.

 Explosion of Wealth

The world’s millionaire population will leapfrog to 53 million from 35 million over the next five years, supported by an explosion of wealth in emerging markets.

China will be a large driving force in the growth of global wealth, alongside Indonesia, India, Mexico and Brazil, the bank said.

The number of Chinese millionaires is set to double to more than 2 million by 2019, the bank projects. While Indonesia, India, Mexico and Brazil, will see substantial increases of 64 percent, 61 percent, 57 percent and 47 percent, respectively.

Outside of developing economies, the US, France, the UK and Germany will also churn out their fair share of millionaires.

 Household Wealth

Millionaires aside, overall household wealth is forecast to grow notably over the next five years. Average wealth per adult worldwide will rise by over 30 percent, or $18,000, to $74,000, the bank projects.

Median wealth per adult in China, currently at $7,000, could grow at more than twice the rate in the United States, reaching $11,400 in 2019, the bank said.

In India, the growth rate will be well above the global average, rising by 37 percent to $6,400 per adult.

Still, in terms of wealth per adult, Switzerland will remain the undisputed leader, followed by Australia and Sweden.

Switzerland’s average wealth per adult rose to a new world record of $581,000 this year. It is the first – and so far only – country in which average wealth has exceeded $500,000. By comparison, the average wealth per adult in Australia stands at $430,800.