World sees 5.2 million new millionaires in pandemic year

The global number of millionaires increased by 5.2 million to 56.1 million during the Covid-19 pandemic in 2020, and the number could exceed 84 million in 2025, a report says. 

Besides, for the first time, more than 1% of all global adults were millionaires in terms of dollar value, says Credit Suisse's Global Wealth Report 2021 released on Tuesday. 

Much of the gain in global wealth came from North America and Europe, where wealth rose by $12.5 trillion and $9.2 trillion respectively. 

The Asia-Pacific region, excluding China and India, gained $4.7 trillion. 

At the end of 2020, wealth per adult in China was 5.4% higher than a year earlier. India saw a 4.4% fall in total wealth to $12.83 trillion. 

The report's authors looked into the impacts of the pandemic and the response of policymakers to global wealth and its distribution. Their analysis showed continued wealth growth.

They concluded that household wealth and macroeconomic indicators seem to be on different trajectories.

Exchange rate fluctuations were the source of the biggest gains and losses of wealth, they also said. 

It was already evident that the American dollar's depreciation had a significant impact on the 2020 outcome. 

Among the countries covered in the report, the Eurozone gained the most, 9.2%, from changes in the American dollar exchange rate. The only substantial depreciation occurred in Russia, down by 16.2%. 

The widespread depreciation of the American dollar accounted for 3.3 percentage points of the growth. 

If exchange rates remained the same as in 2019, total wealth would have grown by 4.1% and wealth per adult by 2.7%, the report said.

Wealth growth versus GDP growth

Generally, in a normal year, household wealth growth would be expected to move roughly in line with GDP growth. Given GDP reductions in 2020 are unlikely to persist, it is not surprising that household wealth has not declined by as much as GDP. 

The report said it is surprising that the countries most affected by the pandemic achieved higher-than-average wealth gains. Belgium, Canada, Singapore, and the UK are the main support for this hypothesis. 
The pandemic's consequences have not only impacted the global economy but also led to widespread rises in the wealth gap between the poor and the rich in 2020. 

Rising inequality
Even though wealth grew globally by $28.7 trillion to reach $418.3 trillion, inequality also rose in all countries in 2020, except for the US. 

Wealth inequality is high in all countries and exceptionally high in some. China and India are two notable examples, recording a strong upward inequality trend from 2000 to 2010.

The share of wealth held by the richest 1% in the world is growing at the fastest rate in 10 nations, including India, China, Brazil, and the US.
"The rise in wealth inequality was likely not caused by the pandemic itself, nor its direct economic impacts, but was instead a consequence of actions undertaken to mitigate its impact, primarily lower interest rates," the report said.