[1] fell by 0.1% and remained
more or less flat at EUR 172.5 trillion.
“The increasing uncertainty takes its toll”, said Michael Heise, chief economist of Allianz Group. “The dismantling of the rule-based global economic order is poisonous for wealth accumulation. The numbers for asset growth also make it evident: Trade is a no zero-sum game. Either all are on the winning side – as in the past – or all are on the losing side – as happened last year. Aggressive protectionism knows no winners.”
Sri Lanka: Slowdown in growth
Although Sri Lanka’s economy faced external
headwinds in 2018, it expanded by 3.2%, only slightly below the rate of 2017
(3.3%). The inflation rate also declined to 4.3%. Against this backdrop,
deposit growth moderated, too: Bank deposits increased by 14.8%, against 17.5%
in 2017. Growth in bank loans, on the other hand, accelerated from 16.1% to
19.6%. This double-digit growth in loans and deposits gives witness to the
rapid progress of Sri Lanka’s economy toward more inclusive growth. Over the
last decade, for example, the poverty ratio has dropped by whopping 10
percentage points to around 4%, one of the lowest in South Asia.
Convergence between poorer and richer countries/regions
comes to a halt
“Debt dynamics in Asia and particularly in
China are concerning”, commented Patricia Pelayo Romero, Allianz
Group Economist and co-author of the report. “Chinese households are
already relatively as indebted as, say, German or Italian ones. The last time
we had to witness such a rapid increase in private indebtedness was in the USA,
Spain and Ireland shortly before the financial crisis. However, compared to
most industrialized countries, debt levels in China are still markedly lower.
There is still time to cope with the development and avoid a debt crisis.”
Because of the
strong growth in liabilities, net financial assets i.e. the difference between gross
financial assets and debt, fell worldwide by 1.9% to EUR 129.8 trillion at the
close of 2018. Emerging countries/regions in particular suffered a drastic decline:
Net financial assets shrank by 5.7% (industrialized countries/regions: -1.1%);
Asia (ex Japan) posted a decline of 6.0%.
Singapore takes the crown from Japan
The ranking of the richest countries/regions (financial assets
per capita, see table for the top 20) is again topped by the USA, replacing Switzerland, not least
thanks to the strong dollar. And Singapore climbed to third place in 2018,
capturing, for the first time, the crown as the richest country/region in Asia.
Taking a longer-term view by looking at how the list has changed since the turn
of the century, the rise of Asia becomes evident: The big winners include first
and foremost Singapore (+13 places) and Taiwan (+10 places) as well as – last
year’s setback notwithstanding – China (+6 places) and South Korea (+5 places).
Just a bump in the road?
For the first time in over a decade, the global
wealth middle class did not grow: At the end of 2018, roughly 1,040 million
people belonged to the global wealth middle class – which is more or less the
same number of people as one year before. Against the backdrop of shrinking
assets in China, this does not come as a big surprise. Because up to now the
emergence of the new global middle class was mainly a Chinese affair: Almost
half of their members speak Chinese as well as 25% of the wealth upper class.
“There are still plenty of opportunities for
global prosperity”, said Arne Holzhausen, Allianz Group Head of
Insurance & Wealth Markets and co-author of the report. “If other
heavily populated countries such as Brazil, Russia, Indonesia and in particular
India would have a level distribution of wealth comparable to China, the global
wealth middle class would be boosted by around 350 million people and the
global wealth upper class by around 200 million people. And the global
distribution of wealth would be a little more equal: at the end of 2018, the
richest 10% of the population worldwide owned roughly 82% of total net
financial assets. Questioning globalization and free trade now deprives millions
of people around the world of their opportunities for advancement.”
