Savings Virus // Global Wealth Increases Amid Pandemic

The pandemic led not to a fall, but to an increase in global prosperity, according to data from the international consulting company BCG. Against the background of cash injections into the markets from leading central banks, total financial assets in the world grew by 8%, to $ 250 trillion, and real assets – by 7%, to $ 235 trillion. Forced restrictions on consumption led to an increase in savings, while investors began to look for more highly profitable investment instruments. This trend affected Russia to a lesser extent – most of the country’s financial assets are still on deposits.

In 2020, the volume of global wealth grew by 7.7% compared to 2019, to $ 431 trillion. This was due to the resilience of the stock market and a sharp rise in savings, according to the BCG report. After the 2008 financial crisis, the situation was different – then, due to the market correction, the volume of general welfare fell by 8%.

In 2020, total financial assets (investments in stocks and bonds, insurance and pensions, shares in funds) grew by 8%, to $ 250 trillion, investments in real assets (real estate, durable goods and values) – by 7%, to $ 235 trillion Let us explain that these amounts are adjusted for financial liabilities – various loans (their volume at the end of last year amounted to $ 53 trillion, plus 5% by 2019).

The volume of cash and funds on deposits over the past year increased globally by 10.6%, which was the most significant increase in the last 20 years.

The capitalization of the stock markets grew comparable – by 11.5% (the value of real estate – by 6.8%). At the same time, there was a clear flow from low-yield debt securities to equities, as well as to private funds and real estate. Asia has the largest investment in real assets, at $ 84 trillion, followed by Western Europe ($ 64 trillion) and North America ($ 43.7 trillion). Financial assets, on the other hand, are skewed in favor of North America ($ 111 trillion), followed by Western Europe ($ 52.6 trillion) and Asia (excluding Japan, $ 46.8 trillion). In other regions of the world, the indicators are an order of magnitude lower.

Global debt began to decline under epidemic pressure

The super-rich (people with a wealth of over $ 100 million, there are 60 thousand of them in the world) account for $ 22 trillion, or 15% of the invested financial assets. Let us clarify that only 61% of the total financial assets are invested (for example, they do not include insurance and pensions). In Russia, the indicator of “investment” is higher – about 80% due to the low volume of pension savings.

According to BCG, in Russia the amount of wealth at the end of last year amounted to $ 4.1 trillion, including financial assets – $ 1.6 trillion, real assets – $ 2.8 trillion (liabilities – $ 0.3 trillion).

Financial assets for the year grew by 13%, real assets – by 9%. Liabilities increased by 11%. At the same time, if the world’s deposits account for 28% of financial assets, then in Russia – 61%. Equity ratio is 25% versus 38%, for insurance and retirement plans – 7% versus 29%.

Citizens’ wealth suffers from changing savings patterns

BCG is optimistic about the prospect of the welfare trend, expecting it to continue over the next five years amid economic recovery. Most international experts, however, point to additional risks – associated both with the consequences of the pandemic and with the debt problems of countries. However, in any case, growth, according to BCG, will be concentrated in North America, Asia and Western Europe – they will account for 87% of the increase in the volume of financial assets in the world in the next five years.

Tatiana Edovina

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