BRICS: a factory of millionaires

The US dollar appreciation, the euro depreciation and the real estate prices slowdown have affected the number of millionaires around the world. The good news is that the number of wealth individuals might experience an increase in the next years. A research conducted by Credit Suisse shows that the number of millionaires worldwide is expected to increase by about 18 million, reaching 46 million in 2017. The world wealth, in its turn, may totalize US$ 330 trillion by 2017.

The future is particularly promising to emerging markets, especially to the BRICS (acronym for Brazil, Russia, India, China and South Africa). According to Credit Suisse, only China might add a total of US$ 18 trillion to the stock of global wealth in the next five years and surpass Japan as the second-wealthiest country in the world. The USA should remain on top of the wealth league though, with US$ 89 trillion by 2017.

“Assuming moderate and stable economic growth, we expect total household wealth to rise by almost 50% in the next five years from US$ 223 trillion in 2012 to US$ 330 trillion in 2017”, says the report. The emerging markets, however, have been raising their share of world wealth. “Over the next five years, we expect to see a big improvement in the position of emerging economies (…) We expect that emerging economies will continue to catch up with developed economies, that the middle segment will increase in importance and that the number of millionaires will rise significantly.”

Brazil has been called the “awakening giant” by the report since the country is expected to have a higher level of advance in the number of millionaires in the next five years. According to the research, Brazil will gain 270,000 new millionaires in the period, from 227,000 millionaires to 497,000 in 2017, an increase by 119%. This percentage is the highest one within the BRICS countries. “Similar to a number of other Latin American countries, Brazil has more people in the US$ 10,000–100,000 range relative to the rest of the world, but fewer numbers in each of the other ranges”, says the report.

Russia might experience a sharp increase in the number of millionaires as well. The forecast is that the number of wealthy people will advance 109% from 97,000 in 2012 to 203,000 in 2017. According to Credit Suisse, excluding small Caribbean nations with resident billionaires, wealth inequality in Russia is the highest in the world. “Worldwide there is one billionaire for every US$ 194 billion in household wealth; Russia has one billionaire for every US$ 15 billion. Worldwide, billionaires collectively account for less than 2% of total household wealth; in Russia today, around 100 billionaires own 30% of all personal assets.”

In India, the number of millionaires might grow 53% in the same period, from 158,000 to 242,000 by the year 2017. The study says that wealth growth has been quite steady since 2000 in India, increasing at an average annual rate of 8%. “Together with most countries in the developing world, in India, personal wealth is heavily skewed towards property and other real assets, which make up 84% of estimated household assets.”

The predictions for China continue to be encouraging. According to the report, the number of Chinese millionaires might increase 97%, from 964,000 to 1,901,000 in the next five years. According to the research, China’s total household wealth is the third highest in the world, 25% behind Japan and 59% ahead of France (in fourth place). Due to a high savings rate and relatively well developed financial institutions, a high proportion (47%) of Chinese household assets are in financial form compared with other major developing or transition countries”, says the report.

The report refers to South Africa as one of the most successful African economies and an exciting emerging market. “Unusually for a developing country, household wealth is largely comprised of financial assets, which contribute 70% to the household portfolio. This reflects a vigorous stock market and sophisticated life insurance and pension industries, which are key aspects of the strong modern sector of the economy.”

The report considers “wealth” the value of financial assets plus real assets (principally housing) owned by households, less their debts, and private pension funds. The research was made from 2011 and 2012, and refers to mid-year (end-June) estimates.