Millions more become millionaires in 2020 despite Covid pandemic

The latest global wealth report by investment bank Credit Suisse revealed that wealth per adult rose 6% last year. Credit: PA Images

Millions more people have become millionaires in the last year, as global household wealth ballooned to another record in 2020 despite the Covid-19 pandemic, according to a report.

There were 56.1 million millionaires worldwide last year, up 5.2 million on the previous year.

The latest global wealth report by investment bank Credit Suisse revealed that wealth per adult rose 6% last year to hit another high of £57,598 ($79,952), thanks to soaring house prices and rebounding stock markets.

Total household global wealth grew by 7.4%, or £20.7 trillion ($28.7 trillion) to £301.3 trillion ($418.3 trillion) at the end of 2020, although some of this was helped by exchange rates.

The regional breakdown shows that North America and Europe accounted for the bulk of total wealth gains in 2020, increasing by £8.9 trillion ($12.4 trillion) and £6.6 trillion ($9.2 trillion) respectively.

China added another £3 trillion ($4.2 trillion) and the Asia-Pacific region, excluding China and India, increased by another £3.4 trillion ($4.7 trillion US dollars).

But India saw a 4.4% fall in total wealth, while Latin America was the worst-performing region, with an 11.4% drop.

The study estimated that £12.6 trillion ($17.5 trillion) – or 4.4% – was lost from total global household wealth between January and March 2020 at the start of the crisis.

But it said this had already been largely reversed by the end of June, with personal wealth boosted by recovering stock markets and soaring house prices.

It came as central banks, including the Bank of England, slashed interest rates to historic lows and launched massive money-printing programmes to offset the economic hit from the pandemic, while governments have unleashed huge support schemes.

Anthony Shorrocks, economist and author of the report, said: “Global wealth not only held steady in the face of such turmoil but in fact rapidly increased in the second half of the year.

“Indeed wealth creation in 2020 appears to have been completely detached from the economic woes resulting from Covid-19.

“If asset price increases are set aside, then global household wealth may well have fallen”.

Nannette Hechler-Fayd’herbe, chief investment officer of international wealth management and global head of economics and research at Credit Suisse, said: “There is no denying actions taken by governments and central banks to organise massive income transfer programmes to support the individuals and businesses most adversely affected by the pandemic, and by lowering interest rates, have successfully averted a full scale global crisis."

She added: “The lowering of interest rates by central banks has probably had the greatest impact.

“It is a major reason why share prices and house prices have flourished, and these translate directly into our valuations of household wealth."

The report found that home-owners and those with large share portfolios benefited the most last year, with rising asset prices largely lining the pockets of late middle age individuals, men, and wealthier groups in general.

Female workers initially suffered the most from the pandemic, partly because of their high representation in hard-hit sectors, such as retail and hospitality, the report added.

It predicts that global wealth will soar by more than a third – 39% – over the next five years to hit £420 trillion ($583 trillion US dollars) by 2025.

Wealth per adult is set to jump by 31%, passing the mark of £72,009 ($100,000) within five years.