Boston Consulting Group (BCG) released a report titled "Global Wealth 2012: Battle to regain strength" which outlined the deterioration of wealth in the hands of millionaires in the world. However in developing countries like India, it was a different picture as 28,000 new millionaire households emerged in 2011.
US had the highest number of millionaire households in the world as 51 lakh households tipped above a million dollars in private wealth in 2011. China had 14 lakh such households while India had 1.62 lakh millionaire households as compared to 1.34 lakh in 2010.
While US still retains number one spot worldwide, there has actually been a 2.5% decline in the number of millionaire households in America. Similar trends have been witnessed in other developed countries including major European nations and Japan.
There were a separate breed of households that the BCG report also looked at, called the Ultra High Net Worth (UHNW) households. These represented households with more than $100 million or 555 crore rupees in private wealth.
In 2011 USA had 2,928 UHNW households as compared to 2,989 in 2010. Mature nations like UK, Germany and Australia remained stable while there were 37 new additions to UHNW in India marking an increase of 15%. The same number in China increased by 110 to 648 households.
Despite the shrinking wealth in developed countries, global private wealth levels increased marginally by 1.9% to $122.8 trillion. This growth is driven by developing nations like India and China. In fact, BCG pegs the growth in private wealth in India at a stunning rate of 19% over the coming 4 years. In China, the same increase will be 15%.
Like every story this one too has two sides to the coin. The flip side of increase in the number of ultra rich households is that they may splurge on homes and apartments, driving up property prices. However the positive side is just too hard to ignore and in fact, overshadows the flip side.
Despite the fact that falling stock prices and weak investor sentiment led to a loss of more than Rs. 20,00,000 crore in investor wealth in 2011, a fundamentally strong economy backed by a growth in GDP led to increase in private wealth.
Good or bad, these numbers convincingly point to the fact that growth in global private wealth is because of developing nations like India. The BCG report said…
"Global growth in private wealth is clearly being driven by rapidly developing economies in the ‘new world,’ not by the ‘old world’ of traditional, mature ones"