Widening Chasm Between the Affluent and the Less Fortunate Persists
In the tumultuous year of 2020, the global economy faced unprecedented challenges due to the Covid-19 pandemic. However, the impact on wealth distribution was not uniform across the globe.
Globally, private household wealth increased by a staggering 28.7 trillion US dollars to reach 418.3 trillion US dollars. This growth was driven by several factors, including the recovery of stock prices in the second half of the year and government relief measures in high-income countries.
Notably, the Asia-Pacific region (excluding China and India) contributed an additional 4.7 trillion US dollars to this global wealth gain. China added an impressive 4.2 trillion US dollars, while North America saw a significant increase of 12.4 trillion US dollars in total wealth.
However, the pandemic also led to a significant increase in wealth inequality. The ultra-rich, particularly those with a higher proportion of stocks, generally fared better. By the end of 2020, there were 215,030 ultra-high net worth individuals with a net worth of over 50 million US dollars, a 23.9% increase from the previous year. In the USA, the number of millionaires rose by 1.7 million to 22 million. Germany counted 2.95 million millionaires, a growth of 633,000 since before the COVID-19 pandemic.
On the other hand, some regions suffered losses. Latin America experienced a 11.4% decrease in total wealth, and India saw a 4.4% decrease, equivalent to a loss of 594 billion US dollars. Income losses during the pandemic were more pronounced for women, minorities, and young people in countries without adequate income support.
The pandemic-related initiatives led to a rise in public debt-to-GDP ratios in many countries, with some seeing an increase of 20 percentage points or more. Despite these challenges, income losses during the pandemic were largely mitigated by government relief and employment policies in high-income countries.
The initial shock of the pandemic was evident in the first quarter, with an estimated 17.5 trillion US dollars of global private household wealth being lost, representing a 4.4% decrease. However, this loss was largely recovered by the end of June 2020. Stock prices continued to rise in the second half of the year, reaching record highs by the end of the year.
Despite the overall growth in global wealth, the exact region with the highest increase in total wealth in 2020 remains unclear from the available data. The pandemic's impact on wealth distribution serves as a reminder of the complex interplay between economic factors and global events.
