Global wealth slips for first time in 15 years but set for rebound

investmentnews.com:

Global wealth slipped to $255 trillion in 2022, marking a 4% drop from the previous year and the first decline in 15 years, since the financial crisis of 2008.

While multiple factors including inflation, interest rates and the war in Ukraine have continued into 2023, this year is expected to see a rebound to $267 trillion, according to Boston Consulting Group.

The firm says that 2022 was not all bad for the global wealth market, with a 6.2% increase in the value of personal cash and deposits, as a more risk-averse approach to investments prevailed.

Real assets were also resilient, with the range of assets from real estate to art recording a 5.5% rise last year to a total of $261 trillion, boosting absolute total global wealth to $516 trillion, up 1% year over year.

Michael Kahlich, a BCG managing director and partner, and co-author of the report, explains that 2021 had seen a sharp jump of 10% in global wealth, a difficult feat to follow. But he is optimistic for this year.

“We expect that the improving macroeconomic outlook and rebound in stock markets will drive a return to growth in financial wealth as early as 2023, and our 5-year compound annual growth rate forecast to 2027 remains a healthy 5.3%,” Kahlich said. “However, the recent headwinds in the market show how important it is for industry players to future proof now for consistent long-term growth.”

The report shows that North America and Europe saw overall declines in wealth in 2022, while there was growth in Asia Pacific, the Middle East, Africa and Latin America.

With less wealth in the world, the wealth management industry saw an 11% decline in the volume of client business.

The industry also suffered declining margins, something that had been happening for