Global financial assets grew by 10.4% in 2021, amounting to 233 trillion euros (about US$ 240 trillion). As a result, private wealth across the planet increased by 60 trillion euros (US$ 61.7 trillion), the equivalent of adding two Euro Zones to the amount in the period. The data are from the 13th edition of the Global Wealth Report, prepared by the insurance company Allianz, which covers the situation of assets and debts of families in 57 countries.
According to the report, three regions stood out in asset growth: Asia excluding Japan (+11.3%), Eastern Europe (12.2%) and North America (+12.5%). As in the previous two years, this last region remained the richest in the world: gross financial assets per capita reached a value of 294,240 euros (US$ 303 thousand), compared to a global average of 41,980 euros (US$ 43.2 thousand ) In Western Europe, the per capita figure of 109,340 euros (US$112,600) was 6.7% higher than the previous year.
The total gross financial assets of households in Brazil amounted to 2.567 billion euros in 2021, 9.4% more than the previous year. According to Allianz, this increase was the most modest since the financial crisis and was well below the 15.6% average of the last ten years. The net wealth of Brazilian families grew by 6%, reaching 1.9 trillion euros.
Gross assets per capita in the country reached 11,980 euros, which places it in 40th place among the countries in the study, a position lower than that recorded a year earlier.
The reason for this below-expected performance, according to the report, is due to inflation: the disposable income of Brazilian families showed signs of weakening a few months before reaching the advanced markets. As a consequence, the Brazilian Central Bank began aggressively raising interest rates since 2021.
Thus, deposits grew only 2.4% last year and insurance and private pension assets also suffered, with a growth of only 3.3% (compared to a long-term average of 10.6%). On the other hand, the growth of titles recorded a stronger advance, of 12.6%.
The study points out that the global stock market gave the biggest boost to the evolution of global wealth, contributing around two-thirds to growth in 2021 and boosting bonds as an asset class (+15.2%).
New savings, on the other hand, had fallen by 1% in 2021, to 4.8 trillion euros, but still remained 40% above the level observed in 2019. The composition of savings also changed slightly: the share of bank deposits fell to 63, 2%, while securities represented 15.1% and insurance and private pensions reached 17.4%.
World bank deposits grew by 8.6% in 2021, the second-highest increase on record (following the 12.5% jump in 2020). Assets from insurance and pension funds presented a weaker evolution, rising 5.7%.
According to the Allianz report, 2022 should mark a turning point, as the war in Ukraine interrupted the post-covid-19 recovery and caused galloping inflation, energy and food shortages and a policy of monetary tightening, which has pressured economies and markets.
As a result, the forecast is that household wealth will suffer the effects of this downturn. The study says that global financial assets are expected to decline by more than 2% in 2022, in what will be the first significant destruction of financial wealth since the great financial crisis in 2008.
By projections, households will lose a tenth of their wealth this year, in real terms. To complicate matters, in contrast to the great crisis of 2008, which was followed by a more rapid recovery, the medium-term prospects are poor. The average nominal growth of financial assets should be around 4.6% until 2025, compared to 10.4% in the previous three years.
For Ludovic Subran, Chief Economist of the Allianz Group, “2021 ends an era”. “Not just 2022, but the next few years will be different. The cost of living crisis puts the social contract to the test. Policymakers face the immense challenge of overcoming the energy crisis, ensuring the green transformation and stimulating growth, while monetary policy slams on the brakes,” he said.
At the end of 2021, global household debt reached €52 trillion ($53.3 trillion), an increase of +7.6% year-on-year. According to Allianz, the last time there was growth above this level was in 2006, well before the great global financial crisis.
The geographic allocation of debt has changed since the last crisis. While the share of advanced markets continues to decline (the US share, for example, has dropped ten percentage points to 31% since the great crisis), emerging economies account for an ever-increasing share of global debt, particularly Asia ( excluding Japan), whose share has more than doubled in the last decade, reaching 27.6%.
Patricia Pelayo Romero, co-author of the report, called this sharp rise in debt at the start of a global recession worrying. “In emerging markets, household debt has increased over the past decade at double-digit growth rates, which is more than five times the speed seen in advanced economies,” she compared.
She considers that overall debt levels seem manageable, but given the strong headwinds these markets are facing structurally, there is a real threat of a debt crisis.