Global wealth drops for first time in 15 years (by $9 trillion)

Global financial wealth, which had been steadily growing for nearly 15 years since the 2008 financial crisis, came to a halt in 2022, experiencing a 4% decline to reach $255 trillion.

The notable decline is one of the main findings of this year’s Global Wealth Report, an annual study of the global wealth management industry from consulting firm Boston Consulting Group. This downturn followed a strong year in 2021, with a remarkable increase of over 10% in financial wealth, one of the most significant surges in more than a decade.

Despite a strong 2021, various factors contributed to a decline in global financial wealth in 2022, amounting to a loss of around $9 trillion in assets. Among those contributing factors were rising inflation (caused by a rise in interest rates), fluctuating investor confidence, and geopolitical uncertainties, with the war in Ukraine chief among them.

Despite this general decline, wealth managers found a silver lining in a surge of 6.2% in personal cash and deposits, offering potential gains in interest income. In addition, the value of real assets continued to grow by 5.5%, reaching a high of $261 trillion in 2022.

Real assets are physical or tangible assets with intrinsic value, like real estate, land, buildings, art, jewelry, antiques, rare wines, and other collectibles. Unlike financial assets, which are based on monetary claims or contractual obligations, real assets have inherent value and can provide returns. They are often seen as a means of diversifying investment portfolios and preserving wealth.

The report notes that global financial wealth is expected to see a rebound in 2023 by around 5%, with a forecast high of $267 trillion. Some of the factors that give experts a positive outlook for 2023 are an overall improving macroeconomic outlook, China reopening for business following its strict Covid-19 lockdowns, an ongoing rebound in stock markets, strong growth in Asia-Pacific, and growth in the Middle East.