Subdued economic growth, falling stock markets and the continuing Eurozone debt crisis is making everyone poorer, according to new research by a leading global bank.
Average global household wealth has fallen 5.2% to US$223 trillion in the 12 months from June 2011.
The returns are the worst since the downturn and the first fall since 2007-08.
Although many feel poorer, Credit Suisse explains in the 64 page report Global Wealth 2012: The Year in Review that much of the collapse is down to the appreciating US dollar – and different measures, like applying constant exchange rates, show a 1% increase rather than a decline.
However, Europeans are the biggest financial losers – with $10.9 trillion of the $12.3 trillion loss in global household wealth stemming from the European Union and the Eurozone specifically.
Prospects for Europe dim
Even with constant exchange rates, Europe’s total household wealth fell by $1 trillion.
The Asia Pacific region, excluding China and India, was another top loser, with $1.3 trillion wiped off household wealth by the appreciating US dollar.
Losses in Africa, India and the Latin America were balanced by slight gains in North America ($880 billion) and China ($560 billion), which has seen household wealth grow 13 a year since 2000.
The latest wealth estimates show that by mid-2011, everywhere except Africa had fully recovered from the financial crisis, but Europe and India have now dropped back below 2007 levels.
“The prospects for Europe look less bright because household wealth has suffered hits from several quarters,” says the report.
“Equity markets have been dismal, house prices have been stagnant, and depreciating currencies have added to the overall gloom. Eurozone countries, in particular, have tended to move downwards in the wealth league tables, and residents in these countries have tended to be replaced in the higher wealth groups.
Emerging markets hold key to riches
“History suggests that equity price falls and the currency depreciation for Europe over the last year are unlikely to be repeated to the same extent this year; but the overall wealth outlook remains neutral at best, rather than positive.
“From a global viewpoint, it is the emerging market giants – most especially China – which will continue to hold the key to household wealth creation in the immediate future.”
Italy tops the global wealth pyramid with a 23% drop, greater declines were experienced in Finland, Bangladesh, Austria, Romania, Spain and Israel.
Market capitalization fell by more than 30 % in Portugal and Ukraine, and by more than 40 % in Argentina, Greece and Serbia.
“Relatively few countries escaped reversals, although stock prices rose by more than 15 % in Thailand, Tunisia, Vietnam, Mexico and the Philippines, while Ireland rebounded from its recent setbacks with a robust rise of 88 %,” says the report.
You can download the report here – Global Wealth 2012: The Year in Review