The value of global financial wealth shrank for the first time in 15 years in 2022, declining by 4% to $255 trillion. Drivers include spiking inflation, the resulting rise in interest rates, and poor equity market performance against the backdrop of geopolitical uncertainty sparked by the war in Ukraine. However, the decline is expected to be short lived, with a 5% rebound to $267 trillion expected in 2023.
These are among the findings of the BCG Global Wealth Report 2023: Resetting the Course, the 23rd annual global wealth report from Boston Consulting Group (BCG), being released today.
Bright spots in 2022 include a 6.2% increase in the value of personal cash and deposits, as a more risk-averse approach to investments prevailed. The value of real assets, ranging from real estate to art, also rose by 5.5% to reach $261 trillion. Overall, that brought total absolute global wealth to $516 trillion in 2022, a 1% increase compared with 2021.
“The first downturn in the global financial wealth market since the 2008 crisis came after a 10% rise in value in 2021, which was one of the sharpest in over a decade,” said Michael Kahlich, a BCG managing director and partner, and coauthor of the report. “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 five-year compound annual growth rate forecast to 2027 remains a healthy 5.3%. However, the recent headwinds in the market show how important it is for industry players to future proof now for consistent long-term growth.”
