Wealth Boomed During Covid-19 In These Countries

If you lived in these countries you would likely have seen your wealth surge during the coronavirus pandemic, says a new study. However, the U.K. leads developed nations faring the worst.

Adults in the Philippines, Egypt and Bangladesh saw the biggest increases to their wealth to the tune of around 10%, says a report from Credit Suisse published on Thursday (22 October).

In fourth place, adults in the Netherlands added roughly $15,000 to their wealth in the first half of 2020. But it was China, in fifth, that is the big success story.

“China is one of the winners and wealth per adult has been increasing and we expect that just to persist,” says Nannette Hechler-Fayd’herbe, chief investment officer of International Wealth Management at Credit Suisse. The average wealth per Chinese adult stands at $74,621, a 5.5% increase since January when the country was in the process of quarantining Wuhan.

Today Wuhan is booming with factories re-opening and consumers shopping again. Earlier this week, China reported that its economy grew 4.9% in the third quarter of this year, while most developed economies were in recession.

“China has been able to absorb the pandemic without blinking,” says Anthony Shorrocks, a professor at the University of Manchester and one of the authors of the Credit Suisse Global Wealth Report.

While adults Switzerland, Taiwan and the Netherlands have seen the biggest actual growth to their wealth, this is mostly due to currency fluctuations, says Shorrocks. The strong Swiss franc has helped its citizens boost their wealth by an average of $20,000 to $598,410 per person by the end of June, more than any other country.

Yet still some Swiss are asking their government for more money.

Global Wealth Hits $400 Trillion

Overall, the Swiss bank says there is about $400 trillion of wealth in the world. That works out at roughly 77,309 for every adult, an average which is inevitably skewed by the 1% of wealth earners.

Earlier this month, Credit Suisse’s main rival, UBS, found that billionaire wealth had crossed the $10 trillion threshold for the first time ever.

Despite this disparity, Credit Suisse says it has seen “no hard evidence” that inequality is increasing within countries. “Actually measures of inequality have declined in the U.S.,” says Hechler-Fayd’herbe.

In the U.S., which is third in household wealth only after Switzerland and Hong Kong, each adult is worth an average of $463,550. “In the U.S. wealth per adults is likely to remain a bit lower than when we started 2020,” adds Hechler-Fayd’herbe.

U.K. Suffers Biggest Hit To Household Wealth

Inequality still pervades on a global level, however. Latin America saw the biggest fall in wealth. The average adult in Brazil lost as much as 25%. This was closely followed by those in South Africa and Mexico.

But it was the U.K. which was the surprise basket case. “Among the developed countries it was certainly one of the more adversely affected,” says Hechler-Fayd’herbe. “The reasons are that financial assets in the U.K. have not been able to recover.”

Average wealth in the U.K. remains 6.5% below January levels, meaning each adult lost an average of $18,340.

Actually, one third of households in the U.K. have seen their income cut since February, according to figures released by the Financial Conduct Authority (FCA) on Thursday (22 October.) Young adults and black, Asian and minority ethnic people have been affected the worst.

The U.K. is not along among developed countries, says Credit Suisse: “In the United States, for example, rates of infection and hospitalization for key minorities were much higher than for the white population. With job losses also being higher than for the white population, [minority] groups suffered even more.”

Millennials have also been disproportionally punished by the economic effects of Covid-19. Worse, Credit Suisse says they can expect a “double whammy” over the next few years as “economic activity is reduced, globalization goes into reverse, and travel is discouraged.”