Global inequality
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%.