A recent report has revealed the largest drop in Asia’s ultra-rich population compared to North America and Europe. The data from Altrata’s report, regarding a continent known for its rapid economic growth and burgeoning affluence, is startling.
In the year 2022, Asia’s ultra-high-net-worth (UHNW) population saw a decline of 10.9%, marking the most significant regional drop globally. This means a reduction of 11% in the number of individuals classified as UHNW, equating to 108,370 individuals. This sharp decline raises some intriguing questions.
- What drove this steep fall in Asia’s UHNW population?
According to the report, the influencing factors include China’s Covid lockdown, the ongoing war in Ukraine, and disruptions in regional supply chains.
The war in Ukraine, for instance, affected tech-heavy markets like South Korea and Taiwan, which rely heavily on exports and faced compromised consumption due to global supply chain disruptions. This underscores the interconnectedness of today’s economies and the domino effect they can have on wealth distribution.
2. How does Asia’s wealth compare to its Western counterparts?
Surprisingly, despite the decline, Asia still boasts a combined net worth of its super-rich population at $12.13 trillion, surpassing Europe’s $11.73 trillion. This intriguing paradox raises questions about the quality of wealth distribution within these regions. It challenges the conventional wisdom that the West is inherently wealthier, indicating that Asia’s economic growth has created substantial wealth, even in the face of recent setbacks.
Comparison
In Europe, the second-worst regional performer after Asia, the report points to the “direct fallout” from Russia’s invasion of Ukraine as the primary driver behind a 7.1% drop in the UHNW population. Moreover, inflationary shocks stemming from Russia’s manipulation of energy supplies, upon which Europe relies heavily, created an environment of heightened risk aversion. This, in turn, contributed to the disruption of supply chains, compounding the decline.
While Asia and Europe grapple with wealth contractions, North America – the world’s largest ultra-wealthy market – posted a 4% decline in its UHNW population. The report attributes this decline to the U.S. Federal Reserve’s aggressive rate-hiking cycle initiated in response to soaring inflation, reaching levels not seen in four decades. This divergence in the cause of wealth decline between North America and Asia/Europe illustrates the different economic challenges these regions face.
The Middle East, Latin America, and the Caribbean present a contrasting picture. They experienced significant gains in their UHNW populations. The Middle East saw 15.7% surge, primarily driven by a spike in commodity prices. Latin America and the Caribbean recorded 17.5% increase, reflecting improved terms of trade due to higher commodity prices. This divergence in regional performance underscores the importance of commodity markets in shaping wealth dynamics.
Potential for Recovery
However, what sets Asia apart is its potential for recovery and growth. Despite the recent decline, Altrata forecasts an increase in the global UHNW population over the next five years, with notable contributions expected from Asia. In fact, Asia is projected to witness the strongest growth in its UHNW population and combined net worth. This raises an interesting point – an economic resurgence in Asia could have a disproportionate impact on global wealth distribution.
Among cities, Singapore is reported to have emerged as a notable player. It recorded a remarkable 13.4% increase in its UHNW population, outperforming other top cities. This growth not only showcases Singapore’s economic resilience but also highlights its attractiveness as a hub for wealth creation and management.
