Who Owns the World's Wealth
In 2000 it was reported in a UN report that the richest 1% of adults in the world are the owners of 40% of the global wealth. The US , Europe and Japan accounted for most of the extremely wealthy individuals. US and Japan had between them nearly 60% wealthiest adults of the world. In a 2014 study by a Swiss Bank the richest 1% had increased their ownership to nearly 48% of the global wealth. In contrast the bottom half of the world population owned only 1% of the total wealth.
The Bank calculated the global wealth to be a new record at $263 trillion in 2014 as against $117 trillion in 2000. In fourteen years the wealth had more than doubled. Nearly one million people rose to become millionaires in 2014, the slowest in recent years.
The regions of North America and Asia-Pacific saw better economic growth in 2014 compared to Latin America and Europe. North america registered high growth due to strong equity market performance and Asia Pacific due to superior economic performance. However, Latin America saw erosion due to falling commodity prices and it hit Brazil especially hard. Europe continued to register low growth rates around 4%.
Wealth distribution reports generally describe high net worth individuals as those having investable wealth between $1 to $5 million million (HNWI), and those with $30 million and more as ultra HNWI. Those in between are called mid tier millionaires.
Global HNWI numbers grew by 6.7% in 2014 to 14.6 million and their combined wealth rise by 7.2% to $ 56.4 trillion. The rates were nearly half of the growth rates registered in 2013. In absolute terms the Asia-Pacific region is catching up with the once affluent and well established leader North America. In 2014, the combined wealth of HNWI in N. America was $ 16.2 trillion compared to $ 15.8 trillion for Asia-Pacific. The only region that saw its wealth decrease was Latin America by 0.6%.
It is noteworthy that India's performance has been the best in Asia-Pacific region in 2014. As against growth rates of 2% and 4% in 2013 it recorded a growth rate of 26.3% and 28.2% , but on a relatively lower base.in 2014 in HNWI and their wealth respectively. This is due to political stability in a single party majority in Parliament, and creation of a improved business friendly environment. Its ranking improved by five places from 16th in 2013 to 11th in 2014.
In spite of Chinese economy slowing down somewhat it has however continued with a good 17.5% growth rate for HNWI and 19.3% growth rate in HNWI wealth in 2014. Better performance in equity markets and increased exports in 2014 led to this performance.
Together US and China accounted for more than 50% of the global increase in HNWI population during 2014. India and China account for nearly two thirds of the HNWI and nearly fifty percent of the wealth in the Asia-Pacific region, with China predictably having the lion's share. In number of HNWI, China outpaces India by 4.5 times. In 2014 there were 1,98,000 Indian HNWI compared to 8,90,000 Chinese.
However these figures pale when compared with USA which has 43,51,000 HNWI and Japan which has 24,52,000 HNWI's in 2014. Tiny Singapore has 1,04,000 individuals as HNWI. Switzerland has 3,43,000 and Canada has 3,33,000 HNWI. India has just overtaken Netherland (1,90,000) and S. Korea (1,89,000) and should be able to overtake Italy (2,19,000) and Australia (2,26,000) in the near future. Brazil with i,61,000 and Russia with 1,55,000 HNWI's are behind India.
It is estimated that the global HNWI wealth will cross $70 trillion by 2017 at an annual growth rate of 7.7% .
It is important to note that it was the Ultra High Net Worth Individuals (UHNWI), those with investable assets of more than $30 million who have acted as the primary growth drivers for the increase in HNWI and their wealth. They constitute only 1% of the HNW individuals but account for nearly 35% of the wealth. Their population grew globally by 8.6% in 2014 bettering the 7.7% rate of growth of mid-tier millionaires. Asia-Pacific region saw the highest growth in UHNWI's (16.5%) followed by North America (10.7%), Specifically India with a growth of 31% and China with 21.6% contributed to the strong Asia-Pacific growth.
It is estimated that in the last 15 years , only four countries have increased their wealth at a higher rate than India which did so by 211%. Indonesia (362%), Chana(341%), Russia (253%) and Australia (248%) are ahead of India. Advanced countries saw moderate rates of growth like Japan (39%), USA (41%) and UK (58%).
India saw its per capita income go upto $2,800 from a modest $900 in 2000 making it the 10th richest country in the world according to total individual private wealth. Indonesia has a per capita income of $6,000 as compared to $1,300 in 2000. On per capita comparison basis India's rank drops to 20th in the world. Both India and Indinesia continue to be poor countries but appear high because of their large populations.
In the top ten growth rate countries the highest per capita income in Switzerland at $2,85,100, followed by Australia at $2,04,000 and at third place is Canada with $1,39,000. China's per capita income is $12,800 and was $2,900 in 2000. per capita income forUS is $1,50,600 and UK is $ 1,47,600.
In India, Pune is where the maximum millionaires growth rate was registered from 2000 to 2014, from 60 to 250 numbers, and it was behind Ho Chi Minh City and Jakarta which had 200 and 1390 millionaires in 2014 respectively in the Asia-Pacific region. The fourth city was Mumbai with 2690 and Hyderabad was fifth with 510 millionaires resp. Delhi has 1350 millionaires up from a figure of 430 in 2000.
It can thus be seen that the Asia -Pacific region is growing at a faster rate than the richer North American region. India and China are the two major growth drivers in this region. China is far ahead of India though population wise both are nearly same. India has much catching up to do and it calls for far greater reforms in its economy and at a much faster rate than at present. The emphasis on increasing India's manufacturing base is in the right direction but China is always going to compete strongly with us. It has a far wider economic base and a huge Foreign Exchange reserve ($3,500 billion) against $355 billion of India. Even if its GDP rate falls marginally it is still on a better footing than India which is operating at a higher rate but on a much smaller base.
(Ref : Capegemini Financial Services Analysis 2015, World Wealth Report 2015 from Internet sources.)
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