For more than 30 years, the world has looked to Asia as a crucial source of trade and investment opportunities, centering first on Japan and more recently on China and India. Here we summarize and review what has happened to household wealth in the Asian region during this century. Elsewhere we separate China and India from what we refer to as the Asia-Pacific region, so to avoid confusion we use “APAC and the Middle East” to refer to the broader area which includes both China and India.
Seven sub-regions are identified and their relative importance in terms of adult population and total wealth is indicated in Figure 5. China accounts for a little over one third of all adults and a slightly lower proportion of wealth. The share of adults and wealth is more balanced still in the Middle East. But the share of wealth in SE Asia (which includes Japan) – almost half the total – is more than double the population share, while the wealth share of Pacific subgroup (Australia, New Zealand and smaller Pacific island nations) is more than 10 times the size of the population. In contrast, India and South Asia together account for more than one third of adults in the region, but only 6% of total wealth.
Differences in mean wealth per adult are even more pronounced for individual countries. The wealthier countries in the region have wealth per adult well above USD 100,000 while the least wealthy nations struggle to reach USD 5,000 per adult (see Figure 6). In extreme cases, the ratio can approach 100: in 2014, for example, India recorded wealth per adult of USD 4,600 compared to USD 431,000 for Australia.
Currency movements often exacerbate differences in average wealth values between countries. It is interesting to note from Figure 6 that the exchange rates prevailing in 2014 tend to flatter the wealthier countries. Except for Taiwan, each of the countries with mean wealth above USD 20,000 (i.e. China and upwards) have higher values when measured in current USD, while most of the countries with mean wealth below USD 20,000 have higher values when measured in constant USD. Either way, however, differences between countries are very pronounced.
Wealth growth since 2000
It is commonly believed that wealth has grown faster this century in Asia than in the rest of the world, and that China has led the surge. Our results suggest otherwise. From 2000 to 2014, total wealth grew by 125% worldwide, but by only 124% in the APAC and Middle East region (see Figure 7). Over this period, wealth in China rose by a massive 359%, but this was surpassed by the 4-fold increase in the Pacific sub-region. Controlling for exchange rate movements and population growth reverses the China-Pacific ranking. However, when expressed in terms of wealth per adult using constant exchange rates, China’s growth record is now overtaken by India, the Middle East and South Asia. In fact, Figure 7b shows that China’s wealth performance has been fairly average for sub-regions of APAC and the Middle East over the whole period, and below the region average since 2007, due in part to the disproportionate impact of the financial crisis on China.
Figure 7b makes it clear why the wealth growth in Asia underperformed the rest of the world: it has been held back by SE Asia, which still accounts for almost half of household wealth in the region, but has contributed almost nothing to the rise in wealth once currency appreciation is discounted. Figure 8 indicates that relatively slow growth in Hong Kong, Singapore, Taiwan and Korea – albeit from a high base – contributed to the weak growth record. However, Japan is the main culprit: at constant exchange rates, wealth per adult has barely changed since the turn of the century.
At constant exchange rates, average wealth has grown about 200% since 2000 in Malaysia and Pakistan, and by more than 300% in Turkey, Indonesia and Viet Nam (see Figure 8). However, with the exception of Malaysia, currency depreciation has offset much of the gain in these countries – more than 80% in the case of Turkey. In contrast, other countries have benefitted from favorable currency movements, including China and Singapore, and especially New Zealand and Australia, which move into first and second place, respectively when growth is measured at current exchange rates.
Trends in median wealth over time
This year, for the first time, we are able to report trends in median wealth per adult for 2000-2014. These series are interesting because they provide a better idea of how the average adult has fared, and the year-on-year variations capture well the impact of external shocks. Figure 9 shows the growth in median wealth for a selection of countries, rebased to the year 2000.
Over the whole period, median wealth grew roughly in line with mean wealth for most countries. New Zealand and Australia achieved the largest gains, although Indonesia performed better than both up to 2011. Median wealth in Japan shows little change this century, but Hong Kong has done even worse: our evidence suggests that the average adult in Hong Kong has lower wealth now than in 2000. The poor quality of wealth data for Hong Kong limits our confidence in this conclusion, but there is little doubt that the wealth performance of Hong Kong has lagged well behind Singapore, for instance, since the turn of the century, in part because the gains in Singapore have been more evenly spread.
Figure 9 illustrates the impact of the financial crisis on median wealth, with especially large setbacks for New Zealand and Korea. Median wealth in China has shown little change in recent years, and Korea, Hong Kong and India have still not recovered to the level achieved in 2007. Our results suggest that the median wealth holder in Turkey has been subjected to roller coaster, rising by a factor of 250% up to 2007, and then shedding all the gains in the following years.
Trends in the number of millionaires
Another common perception is that the ranks of the wealthy have expanded faster in Asia than elsewhere in the world. Our new data on millionaire trends allow us to test this claim for the first time. Figure 10 displays the millionaire indices for this century by region. The results indicate that the APAC and Middle East region has done rather poorly. For most of the period, the growth record mimics the rest of the world—better than North America, but less impressive than Africa, Europe or Latin America. Since 2011.however, the number of millionaires in APAC and the Middle East has fallen every year. This is in stark contrast to the annual rise in millionaire numbers in the rest of the world, and in all regions outside APAC and the Middle East most of the time.
This unexpected outcome can again be traced to the lackluster performance of SE Asia and, in particular, Japan. Figure 11 shows that SE Asia is the only under-performing sub-region. The number of millionaires in China has risen by a multiple of 28, with the financial crisis causing only a minor pause in the seemingly inexorable rise. Numbers have also grown impressively – by a factor of 11 – in the Pacific sub-region, and Central Asia is not far behind. However the other sub-regions appear to have struggled to maintain the momentum of the early years of the century, with India and the Middle East failing to return to the peak numbers recorded prior to the crisis.
Looking in more detail at millionaire trends, Figure 12 displays the results for individual countries, excluding China since it is so far ahead of the rest. Indonesia did surprisingly well for most of the period, outperforming all other countries in APAC and the Middle East apart from China, until the economic reversals of the past 12 months. However, the exceptionally high growth in millionaire numbers in Indonesia also reflects a significant rise in wealth inequality since 2008 which we document later in this report.
As was the case with median wealth, Japan and Hong Kong lag other Asian countries, acquiring relatively few extra millionaires this century. In fact, the number of millionaires in Japan fell below the 2000 level for much of the period. Pakistan, Saudi Arabia, Turkey and United Arab Emirates are countries which, along with Hong Kong, have not seen the number of millionaires return to the levels recorded in 2007.
The marked differences in millionaire growth rates have inevitably had a significant impact on the residence pattern of millionaires in Asia. Figure 13 captures the change that has occurred. At the turn of the century Japan hosted 2.1 millionaires, more than three quarters of the total resident in APAC and the Middle East. The Japanese number has now grown to 2.6 million according to our estimates, but its regional share has halved to 39%. China’s share has risen 10-fold to 18% and Australia’s share 4-fold to 17%. Representation in Korea, India and Singapore has roughly doubled, but the share has remained constant in Taiwan and fallen in Hong Kong. Indonesia, New Zealand and Turkey are three new countries with at least 1% of the regional millionaire total, the threshold we use for a separate listing in Figure 13.