The impact of Coronavirus on Global Wealth

This post focuses on a recent report produced by Credit Suisse. It is primarily written for students studying the Global Development option for A-level sociology, and is meant to serve as an update on Global inequalities!

In 2019, Privately Owned Global Wealth had grown to $399 trillion, an almost 9% increase on the previous year, according to Credit Suisse’s latest 2020 Global Wealth Report, which focuses on both wealth trends to 2019 and the impacts of Coronavirus on wealth up until June 2020.

That 9% increase from 2018 continued a long term trend of increasing wealth over the last two decades. In the year 2000, global wealth stood at $118 trillion (at current US prices) and has risen on average by 6.6% per annum since then, with a significant decrease (and subsequent recovery) in 2008 with the financial crisis.

NB – wealth is not distributed evenly and the map below shows the median net private wealth per household in different countries in 2019,

The impact of Coronavirus on Global Wealth

The Global Wealth Report notes that to June 2020 Coronavirus has cost the global economy around $8 trillion, in terms of what economic growth was predicted to be.

We see a rapid decline in global wealth per person January to March, when Coronavirus was taking hold, but then a recover, as governments around the world stepped in with stimulus packages.

The chart above also shows you that we’ve basically just had zero growth in wealth since from 2019 to June 2020.

However, you can see that by June 2020 there has been a decline in wealth per person of around $3 000, compared to projected growth which never happened!

The Economic Impact of Coronavrius on Different Regions

The chart below shows the impact by region

The impact of Coronavirus up until June 2020 seems to have been minimal on most regions if we compare the 2019 projections with the actual figures to June 2020.

The global average decline in wealth to June 2020 is – 2%, and most regions have seen around a 2% decline, compared to what was expected, overall we simply have almost 0 global growth compared to an anticipated 2% increase!

There are minor variations across regions, but nothing too significant according to the figures above!

There are significant variations by country

However, if we look at the impact of Coronavirus on wealth by country, we do see significant differences emerging:

The above chart shows us that to June 2020 the UK’s average household wealth declined by 7%, while China’s increased by 4%. Meanwhile the USA has seen almost no change to private household wealth!

This infographic shows the biggest percentage gains and losses per individual by country

We can see some dramatic variation here, with Brazil and South Africa’s per person wealth declining by around 25%, supposedly due to Coronavirus, while quite an eclectic mixture of countries have seen their individual wealth increase by 5%

NB – the figures look more dramatic if you look t the dollar amounts:!

Projections for future wealth growth

The Global Wealth Report is optimistic about future growth potential in most regions, especially India and China

How valid is this data?

NB – this report is latest based on available data, but it was written before the latest wave of lockdowns in November 2020.

The report is very clear that these global wealth trends could change dramatically depending on how Coronavirus and the societal reaction to it develops!

You need to be sceptical I think about the focus of this report – it is on global wealth, rather than global poverty, if you look at the later (poverty not wealth) you realise that there are millions of people around the world who are being pushed into poverty because of Coronavirus (more of that later!) – but you miss out on this in this report because it’s been written mainly (I think) for a Western audience, and you get the impression that’s everything is OK.

This report by Alianz and the World Bank gives you a different impression, talks of a ‘wealth buffer’ which insulates the wealthy from the worst effects of the economic downturn caused by the Pandemic, but it also talks about how millions of those towards the bottom are being pushed into extreme poverty.

You might remember that above the Credit Suisse report shows a negative 2% economic growth rate in Africa, then says nothing else about it – well, that basically means a LOT more people pushed into poverty, which is what the Allianz/ World Bank report focuses on!

Note: Definition of ‘Net Worth’ or Wealth

According to the Global Wealth Report, Net worth, or “wealth,” is the value of financial assets plus real assets (principally housing) owned by households, minus their debts. This figure includes the net value of all the assets a household owns if sold and their private pension fund assets. The figure does not include any state entitlements/ benefits or state debts.

If that wealth average wealth were distributed equally then every adult would have around $77 000. H

In 2019, Privately Owned Global Wealth had grown to $399 trillion, an almost 9% increase on the previous year, and continuing a long term trend of increasing wealth over the last two decades.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.