Allianz unveiled the 13th edition of its “Global Wealth Report”, which puts the asset and debt situation of households in almost 60 countries under the microscope.
In retrospective, 2021 might have been the last year of the old “new normal”, with bullish stock markets powered by monetary policy. Households benefitted handsomely: For a third year in a row, global financial assets grew by double-digits in 2021, reaching EUR 233trn (+10.4%). In these last three years, private wealth increased by a staggering EUR 60trn. This amounts to adding two eurozones to the global financial pile.
Three regions stood out in asset growth: Asia ex Japan (+11.3), Eastern Europe (12.2%) – and North America (+12.5%): As in the two previous years, the richest region of the world – with gross financial assets per capita amounting to EUR 294,240 against a global average of EUR 41,980 – clocked emerging market-like growth rates. On the other hand, Western Europe (EUR 109,340) behaved more like a mature, rich region, with growth at 6.7%.
Main growth driver was the stock market boom, contributing around two thirds to wealth growth in 2021 and propelling the asset class of securities (+15.2%). Fresh savings, however, remained elevated, too. Despite dropping by around 19% in 2021, with EUR 4.8trn they came in at still 40% above the level seen in 2019. The composition of savings, too, changed, albeit only slightly: Bank deposits’ share fell but with 63.2% they remained by far the preferred asset class of savers; on the other hand, securities as well as insurance & pensions found increasing favor with savers, but their shares in fresh savings were much smaller, with 15.5% and 17.4%, respectively. Reflecting these dynamics, global bank deposits grew by “only” 8.6% in 2021, still the second largest increase on record (after the 12.5% jump in 2020). Insurance & pension fund assets showed much weaker development, rising by 5.7%.
2022 marks a turning point. The war in Ukraine choked the recovery post Covid-19 and turned the world upside down: Inflation is rampant, energy and food are scarce, and monetary tightening squeezes economies and markets. Households’ wealth will feel the pinch. Global financial assets are set to decline by more than 2% in 2022, the first significant destruction of financial wealth since the Great Financial Crisis (GFC) in 2008. In real terms, households will lose a tenth of their wealth. But in contrast to the GFC which was followed by a relatively swift turnaround, this time the mid-term outlook, too, is rather bleak: Average nominal growth of financial assets is expected to be at 4.6% until 2025, compared with 10.4% in the preceding three years.
“2021 brings an era to an end.”, said Ludovic Subran, chief economist of Allianz. “The last three years were nothing but extraordinary. It was a bonanza for most savers. Not only 2022 but the coming years will be different. The cost-of-living crisis puts the social contract to the test. Policy makers face the enormous challenge to master the energy crisis, secure the green transformation and spur growth while monetary policy hits the brakes hard. There is no more room for policy mistakes. Key for success are innovative and targeted measures at the national, and European unity at the supranational level.”
The return of debt
At the end of 2021, global household debt stood at EUR 52trn. The annual increase of +7.6% vastly outpaced the long-term average of +4.6% and 2020’s growth of +5.5%. The last time higher growth was clocked was in 2006, well before the GFC. However, due to the sharp increase in nominal output, the global debt ratio (liabilities as a percentage of GDP) even fell to 68.9% (2020: 70.5%). The geographic allocation of debt has changed since the last crisis. While the share of advanced markets is in decline – the US share, for example, dropped by ten percentage points to 31% since the GFC –, emerging economies account for an ever rising portion of global debt, first and foremost Asia (ex Japan): its share has more than doubled over the past decade to 27.6%. “The sharp increase in debt at the onset of a global recession is worrying.”, said Patricia Pelayo Romero, co-author of the report. “In emerging markets, households’ debt has increased with double-digit growth rates over the past decade, more than five times the speed seen in advanced economies. Still, overall debt levels seem manageable, but given the strong structural headwinds these markets are facing, there is a real threat of a debt crisis.”
Bulgaria: Moderate growth of 6.1% in financial assets
The gross financial assets of Bulgarian households rose by 6.1% in 2021, below the long-term average of 7.5% p.a. over the last decade. One driver was the asset class of insurance and pensions which clocked strong growth of 13.0%, fueled by rising inflows of fresh savings to the tune of EUR 1.4bn, up by 34% over the previous year.
The bulk of fresh savings, however, ended up in bank deposits (EUR 3.0bn), propelling this asset class by 9.8%. Securities, on the other hand, increased by a meagre 2.2% in 2021, well below the long-term average of 6.0%. Besides the faltering Bulgarian stock market, weak inflows of only EUR 0.5bn (-75% over 2020) are to blame. Nonetheless, the asset class of securities, including other equity like non-traded company shares, remained the most popular in Bulgaria, with a portfolio share of 45%, followed by bank deposits (36%) and insurance and pension assets (12%).
Debt growth, on the other hand, has risen further to 10.8% in 2021, more than twice the long-term average (+4.5%). The debt ratio (liabilities in % of GDP), however, remained at 31%, thanks to buoyant economic growth; it is more or less in line with the regional average of 33% (Eastern EU members). Net financial assets, finally, increased by 4.9%. With net financial assets per capita of EUR 11,410, Bulgaria is in 36th place in the ranking of the richest countries (financial assets per capita, see table for the top 20).
 Financial assets include cash and bank deposits, receivables from insurance companies and pension institutions, securities (shares, bonds and investment funds) and other receivables.
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