This year, German savers will once again have to live with a real loss in the value of their financial assets. On paper, assets will grow by around three percent, but the inflation rate remains significantly higher. The insurer Allianz expects other regions of the world to fare better. In his current “Global Wealth Report” he expects that the increase in financial assets worldwide will be around six percent. With an equally high inflation rate, at least there is no loss in the end.
“The real enemy of savers is inflation,” said Ludovic Subran, chief economist at the Munich-based group. In Germany, nominal per capita wealth has doubled in the past 20 years. Adjusted for inflation, however, the increase is only 40 percent. “Intelligent savings and greater financial competence are therefore necessary,” says Subran. “In the long term, you can beat inflation.”
For the report, Allianz examined the wealth and debt of the population in 57 countries, which represent 91 percent of global gross domestic product and 72 percent of the world’s population. Global private assets amounted to 233 trillion euros at the end of 2022, an unimaginably high sum: it corresponds to around 500 times the federal budget.
The development in Germany follows on seamlessly from the previous year. Subran called 2022 a “year of terror.” Private financial assets fell by 2.7 percent – this figure is not adjusted for inflation. This was mainly due to the capital market turbulence, with both stocks and bonds losing value. Allianz economist Arne Holzhausen even spoke somewhat drastically of a “bloodbath” with regard to the bonds, which suffered particularly from the rapid turnaround in interest rates. However, the decline was not unexpected; Allianz had already predicted it when the last report was presented in October 2022.
Regional differences
Development varied greatly regionally. The decline was greatest in North America at 6.2 percent. In Asia, on the other hand, there was growth almost across the board, with the only exception being Japan. In this country, the decline in financial assets reached 4.9 percent, which was greater than during the financial crisis in 2008. Germany therefore also fell behind in terms of per capita wealth: it was in 19th place among the 20 richest countries for 2022. That was one place lower than before; at 63,540 euros it was now just behind Austria. The USA remains the undisputed leader, reaching 251,860 euros per capita.
China does not yet appear on this list. If you look at which countries the particularly rich people come from globally, China is now in second place behind the USA. 20 years ago it wasn’t represented here either. “No country has ever achieved such a development,” said Holzhausen.
The fact that China does not appear in both lists is due to the unequal distribution of wealth in the country. From a global perspective, the goal of a more even distribution of money within a country has not been achieved, on the contrary, says Holzhausen. Inequality has become even worse in emerging countries such as China and Brazil.
Holzhausen has praise for savers in Germany: after the rapid turnaround in interest rates last year, they showed an equally quick reaction and “smart investment behavior”: the total of new investments fell from 348 to 303 billion euros. The share of bank deposits fell from 148 to 112 billion euros. Securities still reached 110 billion euros, after 135 billion euros. Germans invested a new 81 billion euros in insurance and pensions, after 99 billion euros in the previous year.
There was also positive news with regard to global private debt: the household debt ratio shows a “remarkable degree of stability,” according to Allianz, at least in the industrialized countries. The debt continued to increase and stood at 55.8 trillion euros at the end of the year. Since at the same time the global gross domestic product grew even faster, the bottom line was that the debt ratio fell. At 66.1 percent, it is at the same level as at the beginning of the millennium.