Three-fold global wealth over the past two decades, with China lead and overtake the US for the top position throughout the world.
It is one of the takeaways of new reports by the Research Arm consultant McKinsey & Co.
Those who examine the national balance sheet of ten countries representing more than 60% of world income.
New wealth in the world, “We are now rich than we have ever done,” Jan Mischke, a partner at the McKinsey Global Institute in Zurich, said in an interview.
Net worth worldwide rose to $ 514 trillion in 2020, from $ 156 trillion in 2000, according to research.
China accounted for almost a third of the increase.
His wealth skyrocketed to $ 120 trillion only from $ 7 trillion in 2000, years before joining the World Trade Organization, accelerating his economic climbing.
The richest 10% US, held back with a more dim rise in property prices, seeing the wealth of more than double during the period, to $ 90 trillion.
In both countries – the largest economy in the world – more than two-thirds of wealth held by the 10% richest household, and their shares have increased, the report said.
As calculated by McKinsey, 68% of global net wealth is stored in real estate.
The balance is held in matters such as infrastructure, machinery and equipment and, to a much lower level, which is called intangible such as intellectual property and patents.
Where financial assets are not counted in the calculation of global wealth because they are effectively offset by liabilities: corporate bonds held by an individual investor, for example, representing IOU by the company.
‘The side effects that increased sharply in net worth over the past two decades have exceeded the increase in global gross domestic product and has been triggered by the price of balloon property pumped with a decline in interest rates, according to McKinsey.
It was found that asset prices were almost 50% above their long-term average relative to income.
Which raises questions about sustainability of wealth boom.
“Net worth through the price increase above and beyond questionable inflation in many ways,” said Mischke.
“Appears with all kinds of side effects.” Real-estate values ​​that surge can make ownership at home not affordable for many people and increase the risk of the financial crisis – such as those who hit the US in 2008 after the housing bubble exploded.
China has the potential to experience the same problem on the debt of property developers such as China Evergrande Group.
The ideal resolution is for world wealth to find its way into more productive investments that expand Global GDP, according to the report.
The nightmare scenario will collapse in the price of assets that can remove as many as a third of global wealth, bring it more in line with world income.