In one of the perhaps least surprising findings of recent times, the annual World Wealth Report, published today by Merrill Lynch and Capgemini, has found that the world’s richest individuals were richer in 2010 than they were prior to the 2008 banking crisis.
Delving deeper into these findings, the report found that the combined wealth of HNWIs (high net worth individuals) reached $42.7 trillon in 2010, this itself a 9.7% increase from 2009 and a figure that indicates a new peak for the wealth of HNWIs globally.
As well as becoming richer, the number of HNWIs, who can be best defined as those with in excess $1 million of free investable capital, has grown by around 11 million when compared to the pre financial collapse figures.
Arguably for us Britons, somewhat of a silver lining comes from the fact that the financial prospects of HNWIs in Britain were partially limited by declining house prices and a rise in unemployment. This meant that among the top 10 richest nations, the growth of rich citizens in the UK was relatively low, with only a 1.4% increase compared to Germany’s 7.2% increase and the US’ 8.3%.
Although it should be noted that, Europe and North America have not enjoyed full recoveries since 2008, and much of this growth is attributable to dramatic wealth increases in the Asia-Pacific region, where HNWIs are now 14.1% richer than 2007.
This is where the story of this year’s report seemingly emerges. Here, with 3.3 million HNWIs, the region overtook Europe and subsequently became the home to the second largest number of rich individuals, although still trailing North America.
Focusing on China and India (two of the so-called BRIC nations) the acceleration of HNWIs is particularly notable. Regarding China, the report’s authors said, “Newly wealthy Chinese buyers are widely reported to be keen bidders and buyers at galleries and auction houses, especially to acquire the fast-diminishing supply of works from native artists.” Findings like this once again raise the question regarding China’s socialist status and in particular the rising acquisitions of luxury cars such as Mercedez-Benz and Ferrari indicates an emerging market for commodities.
In India, there was a 20.8% growth in HNWIs, an increase that saw the country climb to 12th in terms of its number of rich individuals. In noting this trend, it remains to be seen whether this growth in rich individuals will lead to better social mobility in China or India or an ever-widening wealth gap within these countries.
This tendency is potentially alarming as both nations have already been subjected to unwanted coverage in recent years for their growing wealth gaps. The findings of this study are unlikely to alleviate these concerns and in two countries where mass poverty already presents a very serious challenge, an ever-widening wealth gap could become a limiting factor on both of these country’s social stability and international reputations.