An $11 Trillion Global “Wealth Wipeout” Is Underway Due to High Inflation and Interest Rates

By: Carissa | Last updated: Oct 26, 2023

The world has struggled to recover from the COVID-19 pandemic that shut down entire societies and still continues to cripple the global economy. For the first time since 2008, a global “wealth wipeout” has put the entire world in a compromising financial position.

According to a new UBS study, wealth across every nation has decreased significantly due to inflation, rising interest rates, and currency depreciation. Household wealth also dipped globally by 2.4%, or a whopping $11.3 trillion.

Some Areas More Affected Than Others

While wealth evolution grew exponentially amid the pandemic in 2021, the following year put the world at a deficit. In 2022, wealth dropped to low levels not seen since 2008.


Source: Matt Cardy/Getty Images

A closer look shows that the majority of wealth losses are more common in wealthier nations in Europe, North America, and Asia-Pacific. All over the map, raised interest and inflation rates have proven to put a dent in individual savings and overall wealth.


Interest Rates Continue to Reach New Heights

Household wealth temporarily saw a surge as nations received COVID-19 relief from the government, but Russia’s war with Ukraine has caused financial hardship and inflation globally.


Source: Vecteezy

In turn, banks have raised interest rates by a lot in the past year. The shift in society has proven to be costly all over the world. The United States has reached historic levels of high inflation as a result.

Currency Depreciation Has Contributed to the “Wealth Wipeout”

UBS attributes local currency depreciation to the world’s multi-trillion dollar wealth decline. Depreciation against the US dollar has been troublesome overall, making imports for other countries more expensive.


Source: Kevin Sabitus/Getty Images

As the almighty US dollar holds less value in other countries, the financial problems of the world continue to mount, putting the economy at an even bigger risk of going belly-up.

The Future Has a Brighter Outlook

Although global wealth diminished in the last year, the future is looking a bit more promising for the time being. UBS believes that positive changes will occur within the next few years. The firm estimates that global wealth “should increase 38%” by 2027, ultimately reaching $627 trillion.


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Of course, there are many extenuating factors that could play a role in global wealth continuing to fall. Nobody anticipated the pandemic, which is greatly to blame for the current state of the economy.