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The future of the global economy is looking increasingly uncertain, but millions of people across the world are getting ready to join the millionaire club — at least on paper.
From 2021 to 2026, the number of millionaires across the globe is expected to grow by over 25 million — or 40% — according to Credit Suisse's annual wealth report released last week. This would bring the total number to over 87 million.
Based on population data and projections from the United Nations' World Population Prospects 2022, this means that in 2026, 1.1% of the world's population could be millionaires — up from 0.8% in 2021.
At nearly 25 million in 2021, the United States has almost four-times as many millionaires as the second-ranked country China, but the report projects the US' millionaire dominance to "erode" in the coming years. "Limited" economic growth and financial assets like stocks falling from "peak values" are expected to slow wealth gains, the report says — leading to US growth of only 13%.
The report highlighted India and Brazil as the nations poised for the largest percent change in millionaire growth from 2021 to 2026 among select countries highlighted in the report. These two countries are projected to both see growth of over 100%.
The following table shows the percent increase in the number of millionaires from 2021 to 2026 for 22 countries.
While China is currently bracing for an economic slowdown, Credit Suisse projects its number of millionaires will increase by 97% from 2021 to 2026, to over 12 million. Some of this disconnect can likely be attributed to the country's significant inequality, something Chinese leaders have taken steps to reduce through its "common prosperity" agenda.
Like China, the US has seen income inequality rise in recent decades. Some of this wealth is tied to growth in stock prices and real estate values — unrealized gains that have taken a major hit this year as stocks have fallen and the housing market has stalled. That said, in the long term, both the stock and housing markets tend to rise, suggesting those invested in them will regain their millionaire status if they lose it during a recession. Russia and the United Kingdom for instance, both of whom are embroiled in their own economic crises, are still expected to see growth in millionaires of 43% and 64%, rising to 503,000 and 4.7 million respectively.
For the average global citizen, however, a severe downturn could produce a decline in living standards that won't be so easy to recover from.
Despite persistent inequality and inflation, lower-income countries will also see the number of millionaires rise. The report found evidence of the "expansion of the middle class in the developing world," and it's in these countries that Credit Suisse expects the number of millionaires to "accelerate" in the coming years.
"Low and middle-income countries currently account for 24% of wealth, but will be responsible for 42% of wealth growth over the next five years," a press release about the report stated. "Middle-income countries will be the primary driver of global trends."
Africa is expected to see its number of millionaires nearly triple from 352,000 to 961,000, or growth of 173%. The number in Latin America is projected to nearly double to over 1.8 million. In comparison, Europe and North America are expected to see more modest growth at 37% and 16% respectively.
To be sure, the short-term growth in millionaires can be a bit misleading when one considers one factor: inflation.
"This rapid rise reflects in part the fact that higher inflation will make it easier to pass the million US dollar threshold," the report said.
When inflation causes prices to spike, this can lead to rising wages, rising home values, and ultimately, larger wealth totals — which means more millionaires.
But that doesn't mean everyone is truly richer. Inflation-adjusted wages in the US for instance, have stalled over the last 40 years, even as the nominal wages have risen considerably.
This means that going forward, the number of millionaires across the world will likely continue to rise. Whether that rise is a result of inflation, shared prosperity, or worsening income inequality will be for economists and policymakers to determine.
