Wednesday, September 15, 2010
America’s dominance of global wealth is slipping
For once, the poor are getting richer faster than the rich are getting richer.While most of the world’s stocks and other assets still belong to Americans and Europeans, the gap is narrowing as emerging markets grow faster and people in the advanced countries focus on paying down debt, according to a report on global wealth by the German insurer Allianz.The United States remains by far the nation with the most wealth, with 101,762 euros ($130,764) per person in stocks, bank accounts and insurance, Allianz researchers said Tuesday. Some 39 percent of the world’s wealth belongs to Americans, while Western Europe accounts for another 31 percent.But American dominance of the world’s financial assets is slipping. United States wealth has plunged 12 percent since 2007, as Americans’ stock portfolios lost value and people diverted assets to pay off mortgages.“Households are paying off debt they acquired during the boom, and that means less money is flowing into investments,” Allianz’s chief economist, Michael Heise, told reporters in Frankfurt on Tuesday.Only Greece, which is in a deep recession and trying to dig its way out of a fiscal crisis, has experienced a bigger decline in wealth since the financial crisis began — 14 percent, according to Allianz. Other big declines occurred in Spain, which also has fiscal and economic problems, as well as Japan and Switzerland. Switzerland remained the wealthiest country, though, with assets worth 163,732 euros per person.Globally, the world is still trying to recover the wealth it has lost since the financial crisis began. Wealth in the 50 countries surveyed rose 7.5 percent last year, but remains 4 percent below the precrisis level, Allianz said.Germany was one of the few advanced countries to have recovered its precrisis wealth, thanks to conservative investment habits. Germans typically have fewer stocks in their portfolios than Americans, Mr. Heise said.But the financial crisis is having a leveling effect on global wealth. In fact, poorer regions of the world have been gaining ground since the dot-com bubble burst at the beginning of the decade.In Eastern Europe, which has had the biggest gains, wealth has soared an average of more than 16 percent a year since in 2000. Asia (not including Japan) and Latin America are close behind with average annual gains of more than 12 percent, Allianz said. The United States and Europe have managed gains of 3 percent or less.In the 50 countries Allianz researchers looked at, more than one billion people out of a total of 4.7 billion have assets of more than 5,300 euros, not counting real estate.True, the gap between rich and poor is still huge. Per capita wealth in the richest countries is still 45 times that of the poorest countries. But a decade ago, wealthy countries had 135 times as much wealth.That is progress, of a sort.