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Income Inequality Increasing: Millionaires Set to Control Half World Wealth

© Flickr / Thomas GalvezIn yet another sign that the global wealth gap is expanding, millionaires are set to possess nearly half the world's wealth by 2019.
In yet another sign that the global wealth gap is expanding, millionaires are set to possess nearly half the world's wealth by 2019. - Sputnik International
In yet another sign that the global wealth gap is expanding, millionaires are set to possess nearly half the world's wealth by 2019.

Boston Consulting Group's annual Global Wealth report says that in 2014 there were 17 million millionaires in the world, up from 15 million in 2013, and they now account for 41% the world's $164 trillion in private wealth, which is expected to rise to 46% share by 2019. 

"The wealthier are getting more and more wealthy," BCG partner and managing director Anna Zakrzewski told MSNBC. "They have a much larger share of their wealth invested in equity markets and last year was a good year for market performance."

In another indication that those gaining wealth are making money from money itself, the report says 73% of the world's gains in private wealth in 2014 came from gains on existing assets rather than the creation of new wealth or business. 

This echoes predictions of economist Thomas Piketty, whose bestseller, "Capital in the 21st Century", predicted that inherited wealth — all those "existing assets" — would be the basis of ever-more-unequal wealth distributions concentrated upwards. 

The report defines wealth as fairly liquid assets like cash, stocks, securities, bonds or pensions, and excludes real estate or business ownership. 

Private Wealth Pivots To Asia-Pacific 

Perhaps unsurprisingly, the United States still has the highest number of millionaires — with 6.9 million, but even though that number grew by 4.7% last year, wealth growth is taking a turn away from the traditional areas of concentration. 

China came in second, with 3.6 million millionaires. Japan, the UK and Switzerland (which had most millionaires per capita) rounded out the Top 5. 

Bahrain had the second highest concentration of millionaires, followed by Qatar, Singapore and Kuwait. 

In all, the world gained over 2 million millionaires last year, and more than half of those were created in China alone. 

Not surprisingly perhaps, for the first time, the Asian-Pacific region has overtaken Europe as the second wealthiest area behind North America.The report says that wealth in the Asia-Pacific grew five times as fast as in North America. 

North America accounted for $50.8 trillion in private wealth, while the Asian Pacific region (excluding Japan for the purposes of BCG's report) had $47 trillion, and Europe weighed in with $39.6 trillion. 

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"Western Europe lagged significantly behind the new world in terms of macroeconomic performance," the report said. "GDP growth in Western European countries was low—with Ireland’s growth rate the highest at 6 percent—as questions surrounding the future of Greece lingered and signs of economic recovery in countries such as Italy and Spain remained rather weak."

The report's authors said they expect Asia's lead to be even more pronounced in coming years, as the existing assets that other regions' growth is based on — like the stock market — slows. 

"We have seen a really strong equity market that has had a very strong effect on existing assets," Daniel Kessler, global leader of BCG’s wealth management division, told the Guardian. 

"But looking forward, we assume a moderation in the market performance, with the main difference the newly created wealth in Asia. Two-thirds of the growth in Asia-Pacific is coming from entrepreneurs. We expect Asia-Pacific to add $27.8tn [to the wealth of the region’s richest] over the next five years, of which 70% will be China and 15% India."

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