EUR200 trillion
2020 was the year of extreme contrasts. The novel Covid-19 virus destroyed millions of lives and livelihoods, plunging the global economy into its deepest recession since World War II. At the same time, monetary and fiscal policy mobilized unimagined sums to support the economy, markets and people, and successfully, too. Incomes were stabilized and stock markets recovered quickly. With this tailwind, households’ wealth weathered the Covid-19 crisis: Global financial assets increased by +9.7% in 2020, reaching the magic EUR200trn mark for the first time.

The discrepancy between wealth and economic growth has rarely been as pronounced as in 2020: Global financial assets grew by a staggering 11.6pp more than economic output. Only in 2008, at the height of the Great Financial Crisis, was the difference similarly high at 12pp, albeit with the opposite sign: At that time, financial assets contracted sharply, while global GDP was still growing (and only collapsed the following year). As a result, global financial assets reached another milestone in 2020: for the first time, they exceeded 300% of global GDP
O Covid-19, where is thy sting?

Despite a subdued start, continued bottlenecks in world trade and new virus variants that forced new restrictions, global GDP will grow strongly in 2021, powered by the vaccination campaign that has allowed many economies to reopen and (partially) return to normality. Moreover, loose monetary policies and generous fiscal support remain in place. The upshot for savers around the world? Bar any major stock market corrections, 2021 should turn out to be another good year for them, with overall growth in financial assets globally of around +7%.
Saving by default
Lockdowns not only brought public life to a standstill but drastically reduced consumption opportunities: The global phenomenon of "forced savings" was born. As a result, for the first time, bank deposits worldwide – the default option of forced savings, i.e. simply leaving unspent income in the bank account – grew at a double-digit rate of +11.9%; the previous peak growth was +8% in the financial crisis year 2008. While the asset class securities grew by +10.9% – buoyed by the strong stock markets – insurance and pension fund assets showed much weaker development, rising by +6.3%. Fresh savings jumped by +78% to EUR5.2bn in 2020, an absolute record. The main driver was massive inflows into bank deposits, which almost tripled (+187%); bank deposits accounted for half or more of fresh savings in all markets considered.
Asia, the undisputed growth champion
In 2020, the Eastern Europe region (+19.1%) was the growth champion, boosted by inflation and a strong rebound in Russia. It was followed by Asia (ex Japan) with +12.7% and North America with +11.6%. For the second year in a row, the richest region of the world clocked emerging market-like growth rates. The long-term development, however, paints a different picture: Taking population growth and inflation into account, Asia (ex Japan) is the undisputed growth champion, with per capita financial assets having increased more than fivefold on average since 2000. This is twice as fast as in the two other emerging regions, Eastern Europe and Latin America.
The US, the undisputed wealth hegemon
Accordingly, the share of the Asia (ex Japan) in global financial assets has jumped from 11% to over 19% in the last ten years. At the same time, Western Europe and Japan have become significantly less important. However, something else is far more remarkable: Households in North America – and that means first and foremost the Americans – continue to hold almost half of the world's total private financial assets, and their share has remained stable over the past decade. This superiority is also reflected in the absolute values per capita: At the end of 2020, average financial assets amounted to EUR260,580 in the US – a factor of 7.2 higher than the global average of EUR35,970. What's more, this factor has even increased slightly since the beginning of the millennium: in 2000, it was 7.0. The US’s wealth is increasingly decoupling from the rest of the world. This contrasts with the development in Western Europe: At EUR 99,270, not only is per capita financial wealth not even half as high as in the US, but the gap from the global average has also narrowed, with the corresponding factor falling from 3.5 (2000) to 2.8 (2020).
Equities or not
The key to high asset growth – not only for US households – lies in the portfolio structure, i.e. in savings behavior. US savers hold just under 55% of their financial assets in the form of securities, primarily equities, and have therefore been able to benefit greatly from the stock market boom of recent years. In Western Europe, however, this proportion is just under 28% and in Japan only 16%. The success of this investment strategy can be clearly quantified. Over the past five years, the increase in value of asset holdings accounted for 70% of total asset growth in the US. For Western Europe, this ratio is 46% and for Germany a very modest 11% (Japan: 6%).
Trend reversal (temporarily) stopped
Global net financial assets increased by +11% in 2020, reaching EUR153.5trn. Moreover, for the first time in three years, the emerging markets (+13.9%) grew faster than the advanced markets (+10.4%), returning to familiar patterns. As a result, the prosperity gap between rich and poor countries has also narrowed somewhat. In 2000, net financial assets per capita were around 89 times higher on average in the advanced markets than in the emerging markets; by 2016, this ratio had fallen to 19. Following an interim rise to 22 (2019), it fell back to 21 in 2020.
Shrinking middle class – but nothing to worry
Nevertheless, the number of members of the global middle wealth class continued to decline in 2020: from around 780 million people in 2019 to around 720 million people last year. However, this isn’t a cause for concern. It is mainly due to the rise of many households in the US, where more people can again count themselves as members of the global wealth upper class, thanks to the strong +13.6% increase in net financial assets. The long-term trend remains intact: Since 2000, the global middle wealth class grew more than three times as fast as the overall population. The global low wealth class, on the other hand, grew only half as fast.
A rich man’s – or woman’s – world
In 2020, the richest 10% of the world's population – around 52 million people in the countries under consideration, with an average net financial assets of EUR250,000 – together own more than 84% of total net financial assets. Among them, the richest 1% – with average net financial assets of more than EUR1.2mn – own almost 41%. These shares, however, have fallen over time (in 2000: 91% and 43%, respectively) as average net wealth per capita showed the lowest annual growth rate in the richest decile (+4.6% since 2000). With +10% and higher, growth was much faster in the middle deciles, i.e. precisely in those where the new middle class of the emerging markets is found.
A smaller piece of the pie
In many countries, the national middle class’s share of total national wealth has declined in recent years, particularly in the 2010s. In 2020, the (unweighted) average share of the middle class fell below the 40% mark for the first time to 39%. In many (very) rich countries such as the US, Switzerland or even Germany, as well as in some developing countries such as Indonesia, South Africa but also China, this share was even below 30%. This gradual disappearance of the middle suggests an increasing polarization of society on wealth issues that could become socially explosive in the long run.

Calm on the debt front
Despite the deep recession in 2020, insolvencies did not spike as generous social transfers as well as debt deferral and debt forbearance policies helped many households. As a result, worldwide household liabilities continued to rise by +5.4% in 2020, matching the previous year's level of +5.5%. However, due to the fall in output, the global debt ratio (liabilities as a percentage of GDP) jumped to 70.3% (2019: 65.5%). And the geographic allocation of debt has changed since the last crisis: emerging markets account for an ever-rising portion of global debt. Asia (ex Japan) ranks first as its share has more than trebled over the past decade to 26.1%. In terms of liabilities per capita, however, the region remains a laggard: with slightly above EUR3,300 it stands at a fraction of the EUR32,990 per capita seen in the advanced markets. So debt is not an issue – as of now – in the household sector.