Allianz Global Wealth Report 2012: Global assets plunge
The third issue of the “Allianz Global Wealth Report“ examines the current global wealth and debt situation of private households based on international data from over 50 countries.From the Preface:
Produced by Allianz Economic Research and Corporate Development, the report details the sluggish economic growth worldwide, with only 0.6% global growth in net capita financial assets in 2011. It also provides insights into the status of personal assets post-financial crisis, as well as the global distribution of wealth and financial assets in various regions of the word.
At first glance, global wealth development paints an impressive picture: last year, the financial assets of private households worldwide topped the 100 trillion mark. This is a staggering amount, enough to allow savers to buy the outstanding government bonds of every country in the world three times over.Here's the report, if you prefer a PDF here's the 98-pager.
If we scratch beneath the surface, however, the development proves to be anything but spectacular.
Since 2000, per capita financial assets have been growing at an average rate of 3% a year – roughly on a par with the global rate of inflation during this period. In other words: over the past eleven years, savers have not, on average, managed to achieve any real value gains. The reason behind this development is obvious: any attempts by households to save have been scuppered by the recurring crises on the financial markets; wealth development in the US and Europe has been particularly disappointing of late. In 2011, western Europe was actually the only region in the world in which assets contracted overall.
The trend definitely provides food for thought. The longer it takes to restructure the financial markets and find a sustainable solution to the eurozone debt crisis, in particular, the greater the risk of “losing” a whole generation of savers because the idea of long-term investment is eyed with deep mistrust. But given the major challenges that lie ahead, from the shifts in the global economic and political weights, to climate change and demographic change, we cannot afford to take the short-sighted approach. Confidence in the financial markets, which serve to balance out risks and returns in the long term, is a must if we want to achieve sustainable growth and prosperity.
But there is another aspect of global wealth development that harbors risks. This time, it is the other side of the coin; private household debt. Although debt growth has slowed considerably across the globe over the past few years – in the US, debt actually declined for the fourth year running in 2011 – the pace of debt growth is still too fast, particularly on the emerging markets, which, even today, are still reporting annual growth rates of 20%....
