Credit Suisse cuts global wealth forecast

[GENEVA] Private wealth will grow more slowly because the global economy isn't advancing as quickly as expected, according to Credit Suisse Group AG.

Wealth is now expected to climb 6.6 per cent a year to US$345 trillion through June 2020, the Zurich-based bank said in its annual wealth report on Tuesday. That compares with last year's projection of an increase of 7 per cent a year to US$369 trillion by 2019.

"The global economic outlook is weaker than previously expected," the world's fourth-largest wealth-management firm said in the report. "This leads us to revise our projections downwards." Private wealth measured in dollars fell 4.7 per cent to US$250.1 trillion in the 12 months through June 30, the first decline since the 2008 financial crisis, as the greenback rose against other currencies, according to Credit Suisse. Net worth valued in dollars dropped in every region except China and North America during the period.

The Swiss bank's prediction is based on the global economy accelerating "slightly" and China's economy "stabilizing" as it continues its transition toward consumption and services.

The global economy may grow 3 per cent this year, compared with 3.4 per cent in 2014, according to the median estimate of 43 economists surveyed by Bloomberg. Growth is expected to revert to 3.4 per cent in 2016 and 2017, according to the Bloomberg survey.

While wealth has doubled since 2000, including a fivefold increase in China, the pace of growth has slowed in recent years, Credit Suisse said. The richest 0.7 per cent of the world's population own 45.2 per cent of global wealth.

A stronger dollar led to the number of super-rich with a net worth of more than US$50 million declining by 800 since mid-2014. The dollar climbed 8 per cent against the pound, 17 per cent versus the yen and 19 per cent versus the euro between June 2014 and June 2015, according to the report.

Wealth growth in Europe may outpace the rate of growth in the US over the next five years, although the US is expected to remain the richest nation, with almost US$113 trillion by 2020, compared with US$85.9 trillion in 2015.

Credit Suisse sees emerging markets outpacing higher-income countries, even after a plunge in China's stock market in June and the devaluation of the yuan triggered a selloff across financial markets over the summer. Wealth in China will surge more than 9 per cent a year, based on the country's economy advancing 6.2 per cent a year, Credit Suisse forecasts.

The number of millionaires will probably increase 46 per cent to 49.3 million over the next five years, with Malaysia more than doubling the number of affluent individuals with US$1 million or more, Credit Suisse forecasts. Millionaires will increase at least 70 per cent in China, Saudi Arabia, Taiwan, Colombia and Poland, according to the report.

Credit Suisse is the fourth-largest wealth manager, behind Swiss competitor UBS Group AG, Morgan Stanley and Bank of America Corp, London-based consultancy Scorpio Partnership said in a report in July.

BLOOMBERG