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COVID-19 Could Erase Up to $16 Trillion in Wealth Globally

Global wealth worth $16 trillion could be wiped out this year due to the COVID-19 pandemic, according to the latest Global Wealth Report from the Boston Consulting Group.

(Investopedia) This is in the worst case scenario with long-term disruptions in labor and productivity. This figure would be far worse than what was seen during the subprime crisis (-$10.2 trillion). In the case of a quick rebound (GDP falls in 2020 but recovers rapidly in 2021), global wealth is expected to fall by $6 trillion.

Despite multiple crises, personal financial wealth has soared over the past two decades—nearly tripling on a global basis from $80.5 trillion at the end of 1999 to $226.4 trillion at the end of 2019. (see chart below) The number of millionaires during this period has also nearly tripled, going from 8.9 million in 1999 to more than 24 million by the end of 2019. The share of wealth held by growth markets has gone from 9.3% to 25.3% during this time. 

It has also been a story of the rich getting richer thanks to the higher share of equities in their portfolios and the longest bull market in history. The high-net-worth segment and the ultra-high-net-worth segments (total financial wealth of over $100 million) saw the highest rates of growth over the past 10 years, according to the report. While they keep more than 50% of their wealth in equities, the retail segment (assets of less than $250,000) invested, on average, only about 9% of their assets in equities and investment funds, with more than 80% going instead into cash and deposits and life insurance and pensions. 

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