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.
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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.
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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.
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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.