Global financial assets are set to contract by more than 2% in 2022, the biggest contraction since the great financial crisis of 2008, and there are no signs of a quick recovery around the corner as growth over the next three years is expected at 4.6% compared with 10.4% in the preceding three years, a new report by Allianz said.
During the past years of growth, "fuelled by bullish stock markets powered by monetary policy", global wealth grew by double-digits in 2021, reaching EUR 233 trillion ($226 trillion).
"In these last three years, private wealth increased by a staggering EUR 60 trillion. This amounts to adding two eurozones to the global financial pile," noted the Global Wealth Report.
The report called 2022 a “turning point” for global wealth, with households set to feel the pinch. In contrast to the global financial crisis, which was followed by a relatively swift turnaround, this time the mid-term outlook, too, is rather bleak: Average nominal growth of financial assets is expected to be at 4.6% until 2025, compared with 10.4% in the preceding three years, the reports said.
The war in Ukraine "choked the recovery post Covid-19 and turned the world upside down" raising food and energy prices, causing soaring inflation which resulted in a global monetary tightening that is squeezing economies and markets.
In addition, there's threat from a ballooning debt crisis, particularly in the emerging markets, where household debt has seen double-digit growth rates over the past decade, more than five times the speed seen in advanced economies.
(Reporting by Brinda Darasha; editing by Seban Scaria)