Insider Insights from Allianz's Global Wealth Report 2024
Allianz Global Wealth Report 2024: Unpacking Financial Trends
Allianz has recently released its 15th edition of the Global Wealth Report, inviting us to explore the asset and debt situation of households across nearly sixty countries. This comprehensive report uncovers surprising insights into global financial health, despite turbulent economic conditions.
Financial Resilience Amid Challenges
The year 2023 was characterized by a wave of monetary tightening; however, economies displayed remarkable resilience. In fact, global financial assets belonging to private households exhibited robust growth, achieving an impressive increase of 7.6%. This resurgence effectively compensated for the previous year’s declines, which recorded losses of -3.5%. By the end of 2023, total financial assets surged to EUR 239 trillion, showcasing a vibrant economic recovery.
The growth story was multifaceted, with significant gains noted across major asset classes. Securities emerged as the standout performer with a remarkable surge of 11.0%, closely followed by insurance and pensions at 6.2%. These gains were largely fueled by a flourishing stock market and heightened interest rates. Conversely, the growth of bank deposits fell to a modest 4.6%, marking one of the lowest increases seen in two decades. This illustrates a significant shift in where individuals are placing their money.
Geographical Growth Patterns
The recovery witnessed in 2023 was widespread. Most notably, only New Zealand and Thailand reported negative growth rates. Regions like Asia and North America recorded growth rates exceeding 8%, with the USA (8.6%) outpacing China (8.2%). This trend highlights a narrowing growth advantage of emerging economies compared to developed markets, a stark contrast to prior years where emerging markets consistently led growth.
According to Allianz's chief economist, Ludovic Subran, this trend reflects evolving global dynamics and the impact of a “fragmenting world.” He emphasizes that the effects of less connectivity will primarily burden emerging economies, signaling that a disconnected world may lead to increased inequality.
The Changing Landscape of Savings and Deposits
As the financial landscape evolved, the approach to savings saw notable changes. In 2023, fresh savings declined significantly by 19.3% to EUR 3.0 trillion, predominantly impacting bank deposits. Global banks experienced a sharp drop in inflows, registering only EUR 19 billion, a staggering 97.7% decrease. A major factor contributing to this slump was the liquidation of EUR 650 billion by US households, indicating a significant shift in financial behavior.
In contrast, securities remained a favored choice. Inflows rose by 10.0%, but within this space, a shift occurred. Many savers pivoted towards bonds while shares experienced net sales across various markets. Despite this retreat from bank deposits, the insurance and pensions sectors displayed remarkable resilience, showing only a minor decline of 4.9% in fresh savings.
A Closer Look at Debt Trends
The interest rate environment also impacted the liabilities of private households in 2023, leading to a further slowdown in the growth of private debt, which fell to 4.1%. This marks the slowest rate of growth seen in nine years, with the total liabilities reaching EUR 57 trillion by year-end. The reduction in debt growth was observed across most regions, especially in Western Europe and North America, where growth rates more than halved.
This scenario resulted in an increase in global net financial assets, which rose by 8.8% to EUR 182 trillion, effectively exceeding the previous record set in 2021. The positive disparity between the growth in assets versus liabilities showcases the ongoing financial recovery.
Real Estate: A Sector Under Pressure
Notably, the real estate market also felt the strain of rising interest rates, as it reported the lowest growth in a decade at just 1.8%. Particularly in Western Europe, real estate values even contracted. Historical data suggests that real estate growth often lags behind financial asset growth, revealing a challenging landscape ahead.
Looking towards the future, potential risks from climate change will increasingly influence real estate values. Projections indicate that under various climate scenarios, the House Price Index could fall by over 20% in numerous markets, equating to an overall reduction of EUR 30 trillion in real estate valuation across the board. Allianz expert Hazem Krichene emphasizes that both location and energy efficiency will define housing prices in the years to come, calling for progressive climate policies to mitigate these risks.
About Allianz
The Allianz Group stands as one of the world's foremost insurers and asset managers, serving around 125 million clients across nearly 70 nations. With a comprehensive range of insurance services, Allianz remains committed to environmentally sustainable practices while managing significant assets on behalf of its clients. Their dedicated team has achieved substantial business outcomes, demonstrating a strong market presence.
Frequently Asked Questions
What is the main insight from the Allianz Global Wealth Report 2024?
The report reveals a robust recovery in global financial assets, highlighting a 7.6% growth despite previous declines.
How did different asset classes perform in 2023?
Securities had the highest growth at 11.0%, followed by insurance and pensions at 6.2%, while bank deposits saw a significant decrease in growth.
Which regions showed the most financial growth?
Asia and North America experienced over 8% growth, with the USA outperforming China in the recovery trajectory.
What are the concerns regarding the real estate market?
The real estate sector faces challenges from rising interest rates and potential climate change impacts, leading to expected declines in property values.
What role does Allianz play in the financial industry?
Allianz is a leading insurer and asset manager, managing assets worth approximately 741 billion euros for diverse clients globally while focusing on sustainability.
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