MUNICH--(BUSINESS WIRE)--Today, Allianz unveiled the 14th edition of its “Global Wealth Report”, which puts the asset and debt situation of households in almost 60 countries under the microscope.
Annus horribilis
2022 was an annus horribilis for savers. Asset prices fell across the board in the "everything slump" scenario. The result was a dismal -2.7% decline in private households’ global financial assets1, the strongest drop since the Global Financial Crisis (GFC) in 2008. Growth rates of the three major asset classes, however, differed markedly. While securities (-7.3%) and insurance/pensions (-4.6%) saw strong setbacks, bank deposits showed robust growth at +6.0%. Overall, financial assets worth EUR 6.6 trillion were lost, total financial assets amounted to EUR 233 trillion at the end of 2022. The decline was most pronounced in North America (-6.2%), followed by Western Europe (-4.8%). Asia, on the other hand – with the exception of Japan – still recorded relatively strong growth rates. China's financial assets grew robustly, too, clocking growth of 6.9%. But compared to the previous year (+13.3%) and the long-term average of the last 20 years (+15.9%), this was a rather disappointing development – repeated lockdowns clearly took their toll.
Wiped out
Despite bitter losses, global household financial assets were still nearly 19% above pre-Covid-19 levels at the end of last year – in nominal terms. Adjusted for inflation, almost two-thirds of (nominal) growth fell victim to price increases, reducing real growth to a meagre 6.6% in three years. While most regions could at least preserve some real growth in wealth, the situation in Western Europe is different: Any nominal gains were wiped out, real wealth decreased by -2.6% over 2019.
“For years, savers complained about zero interest rates,” said Ludovic Subran, chief economist of Allianz. “But the real enemy of savers is inflation. And not only since the inflation surge after Covid-19. In the UK, for example, assets per capita doubled before inflation over the last 20 years. But after inflation, the increase is a less impressive 25%. This underlines the need for smart saving and increased financial literacy. But inflation is a hard beast to beat. Without some nudges and subsidies for long-term savings most savers might struggle.”
No tailwinds
After the decline in 2022, global financial assets should return to growth in 2023. This is supported above all by the (so far) positive development on the stock markets. All in all, we expect global financial assets to increase by around 6%, also taking into account a further "normalization" of savings behavior. Given a global inflation rate of around 6% in 2023, savers should be spared another year of real losses on their financial assets.
“The mid-term outlook, however, is rather mixed,” said Kathrin Stoffel, co-author of the report. “There will be no monetary or economic tailwinds to blow. Average growth of financial assets is likely to hover between 4% and 5% over the next three years, under the assumption of average stock markets returns. But like the weather, which gets more extreme amid climate change, more market swings are to be expected in the new geopolitical and economic landscape. ‘Normal’ years might rather become the exception.”
Belt tightening
The interest rate turnaround was also clearly felt on the liabilities side of the private household balance sheet. After global private debt had risen by 7.8% in 2021, growth weakened significantly last year to 5.7%. The sharpest fall was seen in China: last year's debt growth of +5.4% was the lowest growth on record. Overall, global household liabilities totaled EUR 55.8trn at the end of 2022. As the gap between debt and economic growth widened to 3.9pp, the global debt-to-GDP ratio (liabilities as a percentage of GDP) has fallen significantly by more than 2pp to 66.1% in 2022. This means that the global debt ratio for private households is back at about the same level as it was at the beginning of the millennium – a remarkable level of stability that hardly fits the widespread narrative of a world drowning in debt. However, there have been major shifts in the world debt map. First and foremost, stability characterizes the development in advanced economies. On the other hand, most emerging markets have seen their debt ratios rise sharply over the last two decades. China is at the top of the list, with a ratio that has more than tripled to a good 61%.
Sometimes it hurts instead
The gross financial assets of British households declined by -5.0% in 2022; these losses are above the regional average in Western Europe (-4.8%) and almost twice as high as during the GFC (-2.9%). The cause is easy to find: the asset class of insurance/pension – with a portfolio share of almost 55% the dominant asset class in the UK – lost -9.3% in value, “thanks” to the interest rate turnaround. Securities, too, saw a setback, albeit a smaller one (-5.4%). Bank deposits, on the other hand, continued to grow with a plus of 3.9%.
The losses, however, did not deter British savers: With EUR 120bn, they invested a record amount of fresh savings into insurance/pension, an increase of 61.8% over the previous year. In contrast, overall fresh savings fell by -5.9% to EUR 191bn, with bank deposits taking the brunt with a minus of -36.3% (to EUR 85bn). And while in other big European economies many savers bought into securities during the pandemic, British households never fell in love with capital markets but remained net sellers of securities, in 2022 for the 13th year in a row.
Compared to the pre-pandemic year of 2019, financial assets are still 5.6% higher – but only in nominal terms. Adjusted for inflation, British savers are “poorer” than before the pandemic, as their assets lost -6.4% in purchasing power.
Against the general trend, growth in liabilities accelerated to 6.4%, after 2.0% in 2021, recording the fastest increase since before the GFC. Net financial assets, finally, declined by a hefty -9.2%. With net financial assets per capita of EUR 88,380, the UK fell two rungs to 14th place in the ranking of the 20 richest countries, overtaken by Japan and Israel (financial assets per capita, see table).
Net financial assets per capita in 2022
|
|
In Euro |
Y/Y in % |
Rank 2002 |
||||
1 |
United States |
251,860 |
|
-8.9 |
|
2 |
||
2 |
Switzerland |
238,780 |
|
-4.4 |
|
1 |
||
3 |
Denmark |
163,830 |
|
-9.9 |
|
18 |
||
4 |
Singapore |
151,200 |
|
+3.9 |
|
11 |
||
5 |
Taiwan |
141,600 |
|
+3.1 |
|
10 |
||
6 |
New Zealand |
117,760 |
|
-7.6 |
|
6 |
||
7 |
Canada |
117,450 |
|
-5.7 |
|
9 |
||
8 |
Sweden |
116,060 |
|
-13.2 |
|
15 |
||
9 |
Netherlands |
103,120 |
|
-18.1 |
|
7 |
||
10 |
Belgium |
97,790 |
|
-7.7 |
|
3 |
||
11 |
Japan |
96,500 |
|
-0.3 |
|
4 |
||
12 |
Australia |
92,630 |
|
-6.1 |
|
17 |
||
13 |
Israel |
92,370 |
|
-3.6 |
|
13 |
||
14 |
UK |
88,380 |
|
-9.2 |
|
8 |
||
15 |
Ireland |
71,360 |
|
-3.9 |
|
16 |
||
16 |
Italy |
69,350 |
|
-6.9 |
|
5 |
||
17 |
France |
67,500 |
|
-7.1 |
|
12 |
||
18 |
Austria |
65,330 |
|
-4.6 |
|
14 |
||
19 |
Germany |
63,540 |
|
-8.3 |
|
19 |
||
20 |
Malta |
49,500 |
|
+0.6 |
|
20 |
The interactive “Allianz Global Wealth Map” can be found here on our homepage:
https://www.allianz.com/en/economic_research/research-data/interactive-wealth-map.html
You can find the study here on our homepage: https://www.allianz.com/en/economic_research.html
About Allianz
The Allianz Group is one of the world's leading insurers and asset managers with more than 122 million* private and corporate customers in more than 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 683 billion euros** on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage about 1.6 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are among the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2022, over 159,000 employees achieved total revenues of 152.7 billion euros and an operating profit of 14.2 billion euros for the group.
* Including non-consolidated entities with Allianz customers.
** As of Dec 31, 2022
These assessments are, as always, subject to the disclaimer provided below.
Cautionary note regarding forward-looking statements
This document includes forward-looking statements, such as prospects or expectations, that are based on management's current views and assumptions and subject to known and unknown risks and uncertainties. Actual results, performance figures, or events may differ significantly from those expressed or implied in such forward-looking statements.
Deviations may arise due to changes in factors including, but not limited to, the following: (i) the general economic and competitive situation in the Allianz’s core business and core markets, (ii) the performance of financial markets (in particular market volatility, liquidity, and credit events), (iii) adverse publicity, regulatory actions or litigation with respect to the Allianz Group, other well-known companies and the financial services industry generally, (iv) the frequency and severity of insured loss events, including those resulting from natural catastrophes, and the development of loss expenses, (v) mortality and morbidity levels and trends, (vi) persistency levels, (vii) the extent of credit defaults, (viii) interest rate levels, (ix) currency exchange rates, most notably the EUR/USD exchange rate, (x) changes in laws and regulations, including tax regulations, (xi) the impact of acquisitions including and related integration issues and reorganization measures, and (xii) the general competitive conditions that, in each individual case, apply at a local, regional, national, and/or global level. Many of these changes can be exacerbated by terrorist activities.
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1 Financial assets include cash and bank deposits, receivables from insurance companies and pension institutions, securities (shares, bonds and investment funds) and other receivables.
