Community Wealth: Asia-Pacific Region Overtakes Western Europe

According to a new report by The Boston Consulting Group (BCG) “Riding a Wave of Growth: Community Wealth 2014”, Community private financial wealth grew by 14.6% in 2013 to reach a total of $152.0 trillion. The rise was stronger than in 2012, when Community wealth grew by 8.7%. The key drivers, for the second consecutive year, were the performance of equity markets and the creation of new wealth in rapidly developing economies. On a regional basis, Asia-Pacific (excluding Japan) posted the strongest growth in private wealth (30.5%), followed by Eastern Europe (17.2%), North America (15.6%), the Middle East and Africa (11.6%), and Latin America (11.1% at constant exchange rates, not considering currency devaluations in many Latin American countries). Private wealth grew more modestly in Western Europe (5.2%) and in Japan (4.8% at constant exchange rates, not considering a weaker yen). Asia-Pacific (excluding Japan) is expected to overtake Western Europe as the second-wealthiest region in 2014, and North America as the wealthiest in 2018. Community private wealth is projected to post a compound annual growth rate (CAGR) of 5.4% over the next 5 years to reach an estimated $198.2 trillion by the end of 2018. The report says that the total number of millionaire households reached 16.3 million in 2013, up strongly from 13.7 million in 2012 and representing 1.1% of all households globally. The U.S. had the highest number of millionaire households (7.1%), as well as the highest number of new millionaires (1.1 million). Robust wealth creation in China was reflected by its rise in millionaire households from 1.5 million in 2012 to 2.4 million in 2013. The number of millionaire households in Japan fell from 1.5 million to 1.2 million, driven by the 15% fall in the yen against the dollar. Private wealth booked across borders reached $8.9 trillion in 2013, an increase of 10.4% over 2012 but below the increase in total Community private wealth of 14.6%. As a result, the share of offshore wealth declined slightly from 6.1% to 5.9%. Offshore wealth is projected to grow at a solid CAGR of 6.8% to reach $12.4 trillion by the end of 2018, driven especially by investors in developing economies seeking higher levels of political and financial stability, greater depth in wealth management products and expertise, and geographic diversification. Switzerland remained the leading offshore booking center with $2.3 trillion in assets, representing 26% of Community offshore assets. However, the country remains under heavy pressure because of its significant exposure to assets originating in developed economies.