World added 5.2 million millionaires in 2020 despite coronavirus: report
Recovering stock markets, soaring house prices and other economic factors “completely detached” from the coronavirus pandemic jacked up the number of millionaires globally by 5.2 million people, a new report from Credit Suisse reveals.
More than 1% of adults globally were millionaires for the first time in 2020, bringing the total number of them to 56.1 million. Those with “ultra-high net worth” grew 24%, the highest rate of increase since 2003, Credit Suisse said. It’s the first time in history that more than 1% of the world’s population has been a millionaire in terms of dollars in their coffers.
The “acute short-term impact” the pandemic had on global markets was largely reversed by June of last year, report co-author Anthony Shorrocks, an economist at the University of Manchester, said in a statement. “Global wealth not only held steady in the face of such turmoil but in fact rapidly increased in the second half of the year.”
He also noted that setting aside asset price increases might actually reveal a drop in global wealth, given that less-wealthy sectors with fewer financial assets saw stalled growth. At the same time, the richest 500 people in the world’s added $1.8 trillion to their collective net worth in 2020, Bloomberg reported.
Some of that increase was fueled by emerging economies’ growing prosperity in countries such as China, Credit Suisse said, as well as the middle class’ expansion in the developing world.
The bulk of new wealth, though, was in the U.S. and Europe, rising by $12.4 trillion and $9.2 trillion in those regions, respectively. China’s increase added another $4.2 trillion, with the Asia-Pacific region outside of China and India another $4.7 trillion, Credit Suisse said.
“The rise in wealth inequality was likely not caused by the pandemic itself, nor its direct economic impacts, but was instead a consequence of actions undertaken to mitigate its impact, primarily lower interest rates,” the report noted.
The increase in asset prices, then, did not reflect the pandemic’s economic challenges, Shorrocks said.
“There’s a sort of disconnect between what’s been happening to the wider economies – which have been in serious trouble and required a lot of government intervention – and what’s happened to household wealth, which seems to have just continued as if nothing has been happening,” he told The Guardian.
The wealthiest did not make money because of the pandemic, the report said, but since their stocks and property values rebounded, they did not suffer economically as people who lost job income did. Recovering share prices in the second half of 2020 meant increased wealth for “men, middle-aged people and wealthier individuals in general,” as The Guardian put it.
“The contrast between what has happened to household wealth and what is happening in the wider economy can never have been more stark,” the Credit Suisse report said, attributing this to coronavirus-response policies that inflated assets, the Financial Times said. “Wealth differences between adults widened in 2020 for the world as a whole and also in most countries.”
