The number of millionaires in India would rise by 65 per cent to 305,000 in the next five years, revealed a global wealth report published by Swiss bank Credit Suisse. Globally, the number of dollar millionaires would rise 46.2 per cent, with the steepest increases likely to be across Asia-Pacific (66 per cent) and Africa (73 per cent), the report said.
The report, which focuses on how the middle class has developed since 2000, has found that India had the second highest growth at 150 per cent this period. China had the highest growth in number of middle class at 330 per cent during this period.
“Throughout the world, the size, health and resources of the middle class are seen as key factors in determining the speed and sustainability of economic development,” says John Woods, chief investment officer Asia Pacific, private banking & wealth management, Credit Suisse.
THE RISING RICH 3% of India’s adult population falls in the middle-class wealth category Credit Suisse uses the US as the benchmark, where a middle-class adult is defined as having wealth $50,000 to $500,000, valued at mid-2015 prices Steepest increases likely across Asia-Pacific (66%) and Africa (73%) Number of dollar millionaires will rise 46.2% globally India household wealth has grown 8% in domestic currency terms since 2000.
Credit Suisse defines middle-class in terms of a wealth band instead of an income range. It uses the US as the benchmark country where a middle-class adult is defined as having wealth between $50,000 and $500,000 valued at mid-2015 prices, while using the International Monetary Fund series of purchasing power parity (PPP) values to derive equivalent middle-class wealth bounds in local purchasing power terms for other countries.
“The middle class is often at the heart of new consumption trends, and the major source of demand and funding for entrepreneurs and their businesses,” he says.
Going by this definition, only three per cent of India’s adult population falls in the middle-class wealth category. Total household wealth in India has grown at an average eight per cent in domestic currency terms since 2000, found the report. As in many other developing countries, personal wealth in India is largely made up of property and other real assets, representing 86 per cent of gross household assets.
The global economy is in its sixth consecutive year of real gross domestic product growth above three per cent, underpinned by still rapid – albeit decelerating – growth in some large emerging markets and a boost in the growth rate of some developed economies, in particular Europe.
“Monetary policy is beginning to diverge, with the Fed likely entering a gradual tightening path, while elsewhere central banks are easing or staying put. This explains to some extent the relative changes in wealth over the last year,” says Michael O’Sullivan, chief investment officer for the UK & EEMEA, private banking and wealth management at Credit Suisse.
“Going forward, we expect the global economy to accelerate slightly, with the Chinese economy stabilising as it makes a transition towards consumption and services. Against this backdrop, wealth is set to continue its upward trajectory and could grow at an annual rate of 6.6 per cent (including inflation), reaching $345 trillion in 2020.”