Driven by a strong global economy, the wealth of the world’s high net worth individuals (HNWI) increased 11.4 percent to $37.2 trillion in 2006, according to the 11th annual World Wealth Report, released today by Merrill Lynch and Capgemini.
The largest growth of the HNWI population occurred in Singapore and India, where the increases over 2005 was 21.2 and 20.5 percent, respectively. The Report suggests that economic growth will slow in 2007 as mature economies grow more moderately.
“This year’s Report found that the number of wealthy people, and the amount of wealth that they control, continued to increase in 2006, with extraordinary wealth creation in Singapore and India,” says Robert J. McCann, president of Merrill Lynch’s Global Private Client Group. “The level of wealth creation around the world provides a tremendous opportunity for wealth management firms.”
The BRIC nations (Brazil, Russia, India and China) continued to play increasingly important roles in the global economy in 2006. China and Russia were among the top ten countries with the fastest growing HNWI populations. China’s HNWI population grew by 7.8 percent and Russia’s increased by 15.5 percent.
Latin America saw real GDP growth of 4.8 percent in 2006, and lured substantial foreign direct investment. The region’s HNWI population jumped by 10.2 percent in 2006 as it continued to outperform the global average of 8.3 percent.
The Middle East was the only region to see a dispersion, rather than consolidation, of wealth. The global demand for oil in 2006 helped increase the number of HNWIs by 11.9 percent, but a correction in an overvalued stock market pulled down market capitalisation rates, slowing total wealth accumulation.
“The globalization of wealth creation has accelerated,” says Bertrand Lavayssire, Group Director, Capgemini Financial Services. “If 2005 was characterized by a flow of investment to international funds from HNWIs, 2006 ushered in a new era whereby emerging economies leaped ahead with direct foreign investment, strong domestic demand, and hefty stock market gains.”
Looking ahead, mature markets like the United States are expected to act as an anchor on the world economy as moderate growth rates settle in. Finally, the growth rates of Asia and Latin America are expected to ease back as global demand slows.