Global in­equal­ity

The Pak Banker - - FRONT PAGE -

Many re­search re­ports in re­cent years have fo­cused on the sub­ject of ris­ing in­equal­ity be­tween in­di­vid­u­als and na­tions in the world. Now a new re­port en­ti­tled "Global Wealth Re­port " has been pub­lished by Credit Suisse, a global fi­nan­cial ser­vices com­pany, which says that the rich­est one per cent own half of all the wealth in the world. The re­port points out that since 2000, the gap be­tween the rich and the poor has widened on a scale "not seen for al­most a cen­tury".

In its sixth edi­tion, the Credit Suisse re­port, which tries to guage the fi­nan­cial and phys­i­cal as­sets of 4.7 bil­lion people, presents a com­pre­hen­sive pic­ture of global wealth, cover­ing all re­gions and coun­tries, and all parts of the wealth spec­trum, from the very base of the wealth pyra­mid to what it cat­e­gorises as ul­tra-high net worth in­di­vid­u­als (UHNWIs). The re­port is an up-to-date source of in­for­ma­tion on global house­hold wealth. It re­veals that this year, the United States con­tin­ued adding to global wealth at an im­pres­sive rate, with solid growth also seen in China.

The num­ber of mil­lion­aires around the world has in­creased by 146 per cent since 2000, and there are now more than 120,000 ul­tra­high net worth in­di­vid­u­als - each worth more than $US50 mil­lion. Eight per cent of them are in China, whose wealth has grown five-fold since the turn of the mil­len­nium.

Strong eco­nomic and eq­uity mar­ket per­for­mance helped cre­ate 920,000 new mil­lion­aires glob­ally in 2014, as High Net Worth In­di­vid­u­als (HNWIs 1) grew in both num­ber and wealth to 14.6 mil­lion and US$56.4 tril­lion, re­spec­tively. Asia-Pa­cific ex­panded its HNWI pop­u­la­tion at the fastest rate glob­ally which pushed it past North Amer­ica as the re­gion with the most HNWIs.

By Credit Suisse's reckoning, over $250 tril­lion US worth of wealth has been amassed by house­holds. At the top sit the ul­tra-rich, which the bank de­fines as hav­ing a net worth of at least $50 mil­lion in as­sets. Just below the ul­tra-rich are 34 mil­lion people, each with a net worth of at least $1 mil­lion. Col­lec­tively, people in that part of the pyra­mid make up 0.7 per cent of the world's pop­u­la­tion, but own 45.2 per cent of the world's wealth.

If you ex­tend the cut-off to one per cent of the world's pop­u­la­tion, they own more than half of all wealth in the world. The boom in wealth at the very top marks the re­ver­sal of a trend that had lasted from the turn of the mil­len­nium un­til the fi­nan­cial cri­sis of 2008-09. In 2000, the share of wealth owned by the rich­est 1 per cent was 48.9 per cent. This fell to 44.2 per cent in 2009. Now the wealthy are as­cen­dant once more.

Apart from com­put­ing the wealth of the su­per rich, the re­port also ex­am­ines the wealth of the so-called mid­dle class, the def­i­ni­tion of which varies from coun­try to coun­try. The study re­veals that 14% of world adults con­sti­tuted the mid­dle class in 2015 and held 32% of world wealth. Ac­cord­ing to Credit Suisse, any­one worth be­tween $50,000 and $500,000 would be con­sid­ered mid­dle class for the pur­poses of the sur­vey.

In some coun­tries, the cut- off is higher, for ex­am­ple, in Switzer­land, where the mid­dle class starts at $72,000. In China, it drops to $28,000, while in India, it is at $13,700. Where does Pak­istan stand in the global wealth per­spec­tive? Ac­cord­ing to the Credit Suisse re­port, Pak­istan's mid­dle class con­sists of over 6.27 mil­lion people, which is the 18th largest in the world. The share of mid­dle-class adults in Pak­istan's to­tal adult pop­u­la­tion of 111 mil­lion is 5.7% as op­posed to India's 3% and Aus­tralia's 66%.

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