24 September 2024 07 20 26 32

Financial assets: Liabilities: Expected Real estate: Setback Distribution: Progress is in

Surprising relief restraint the eye of the beholder

Allianz Research

Surprising relief
Allianz Global Wealth Report 2024
Allianz Research

Executive
Summary
Surprising relief
Against the backdrop of resilient economies and booming markets despite
monetary tightening, global financial assets of private households recorded
strong growth in 2023: With an increase of +7.6%, the losses of the previous year
Arne Holzhausen
Head of Insurance, Wealth & ESG Research (-3.5%) were more than made up for. Overall, total financial assets amounted to
[email protected] EUR239trn at the end of 2023. But growth in the three major asset classes was
quite uneven. Securities (+11.0%) and insurance/pensions (+6.2%) benefited from
the stock market boom and higher rates, growing significantly faster than the
average of the last ten years. In contrast, growth in bank deposits fell to +4.6%
after the pandemic-related boom years, recording one of the lowest increases in
Michaela Grimm
Senior Economist, the last 20 years.
Demography & Social Protection
[email protected]
No place for bank deposits
In 2023, the normalization of fresh savings continued after the pandemic-related
boom years of forced savings: They fell by -19.3% to EUR3.0trn. The movement in
stocks is echoed by the shifts in financial asset flows as this decline was almost
exclusively attributable to bank deposits. On balance, banks worldwide only
Hazem Krichene
Senior Economist, Climate received EUR19bn, a slump of -97.7%. The main culprit: US households who
[email protected] liquidated deposits worth EUR650bn. The other two asset classes, on the other
hand, remained popular with savers. Inflows into securities even increased once
again – by +10.0% – from their record level of the previous year. However, there
was a notable change of favorites within this asset class: While shares were
sold on balance in many markets, savers made strong gains in bonds, thanks
Patricia Pelayo-Romero to the turnaround in interest rates. This led to an +84.3% increase in securities
Senior Economist, Insurance & ESG purchases in Western Europe, for example. European savers have never been
[email protected]
more fond of capital market products. Finally, insurance/pensions proved to be
relatively robust, with the decline in fresh savings worldwide amounting to just
-4.9%.

The Atlantic divide

Kathrin Stoffel Savings behavior is a decisive factor for asset growth. There are basically
Economist, Insurance & Wealth
[email protected] two sources of growth in financial assets: savings efforts and price increases
(increase in value). Over the last 20 years, increases in the value of portfolios in
the US – with its strong savings bias towards capital markets – have contributed
an average of 62.4% to annual growth; in Western Europe, this figure is 34.2%
(in Germany, growth over the long term is driven almost exclusively by savings
efforts). This significant difference certainly contributes to the Atlantic divide in
long-term growth in financial assets: While financial assets in Western Europe
have doubled in the last two decades (+104%), the increase in the US is a
whopping +178%, also bolstered by more favorable market developments.

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 24 September 2024

Golden boys and girls

Market developments are also the main reason for the huge differences in
financial assets between the generations. The baby boomers are likely to be
the richest generation that has ever lived, at least in the advanced economies.
Assuming the same stylized savings behavior for the four generations of Baby
Boomers, Gen X, Millennials and Gen Z and extrapolating market trends, none
of the following generations can keep up with the Baby Boomers: In Germany,
for example, they achieved total savings of just under 614% of disposable
income with an average nominal return of 6.1% per year. The big losers are the
Millennials – shortly after they began to accumulate wealth, crisis followed crisis,
resulting in an annual return of just 3.1%. Members of Gen Z, however, have a
good chance to outperform all their predecessors – if they align their savings
behavior to the new realities (and are spared by mega crises).

Broad-based recovery
In contrast to 2022, in which financial assets shrank in many markets and regions
– and also worldwide – the recovery in 2023 was broad-based. In fact, only two
countries – New Zealand and Thailand – recorded negative growth rates last
year. Moreover, growth was relatively uniform across all regions, not least in Asia
and North America, which both grew by over +8% – with the US (+8.6%) growing
even more strongly than China (+8.2%). Only Western Europe (+5.0%), where
the UK‘s weak performance (+1.5%) dampened growth, and Eastern Europe
(+18.0%), where hyperinflation in Türkiye led to high (nominal) growth rates,
were somewhat out of line.

There is only one China

The long-term development over the last 20 years naturally shows greater
differences, with the catch-up effects of the emerging economies taking full
effect: China, Latin America and Eastern Europe are achieving double-digit
growth rates per year, while Japan is only growing at +2% and Western Europe
at just under +4%. However, adjusting for population growth and inflation
more than halves global growth, from +6.0% to +2.5%. Inflation is driving a
large wedge between nominal and real growth rates particularly in Eastern
Europe and Latin America. Only two markets escape this development: Japan
and China. Although real growth is lower here too, the discrepancy is not very
large. Per capita assets in Japan have actually grown slightly faster in real terms
than in Western Europe over the last 20 years. And the gap between China and
the rest of the world becomes huge in real terms: the growth advantage over
the rest of the world is almost 10pps per year. In fact, the purchasing power of
average per capita financial assets in China has increased tenfold in just 20
years.

Three lost years

Inflation has only become really painful in recent years. At the end of 2023,
real financial assets worldwide were only at the level of 2020 – the last three
years were lost years for savers worldwide. Compared to the pre-coronavirus
year 2019, however, there was still an increase of +9.1%. Regional differences
are large. While Asia grew in real terms over all the years – thanks to relatively
low inflation rates – and real financial assets were 26.3% higher at the end of

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2023 than in 2019, the trend in Western Europe was diametrically opposed: real
financial assets have shrunk in recent years and are now 4.3% lower than in
2019. European households suffered four lost years. The trend in North America
was not quite as bad: although it is still below the 2020 figure, the increase
compared to 2019 was 6.0%.

The new reality of a fragmenting world

In one respect, 2023 represented a return to the new reality of a fragmenting
world: The growth advantage of the emerging economies over the advanced
economies has shrunk significantly again, amounting to just 2pps last year. Until
2017, the year in which the trade disputes between the US and China broke out
under President Trump, there was still a growth gap of 10pps or more between
these groups of countries. In 2022, this growth gap widened again, triggered
by the market turbulence caused by the interest rate turnaround, which mainly
affected the US and Western Europe. As expected, however, this return of the
gap appears to have been just a blip.

US at the top
The fact that emerging economies have largely lost their growth lead in six
of the last seven years is primarily due to developments in the US. During this
period, the financial assets of US households not only grew twice as fast as those
in Western Europe, but also faster than the global average and roughly on a par
with Chinese financial assets. The consequence of this performance is reflected
in the regional distribution of global financial assets: North America‘s share has
barely changed in the last 20 years; almost half of all financial assets worldwide
are held by households in North America. This supremacy is also reflected in the
per capita financial assets, at least when looking at the averages: in fact, only
the Swiss (EUR382,910) are still richer than the US Americans (EUR 314,930). All
other countries follow at a fair distance. Adjusted by liabilities, however, the US
overtakes Switzerland (EUR260,320 vs EUR255,440).

Moderate growth ahead

The (so far) positive trend on the stock markets and resilient economies
should lift financial assets in 2024. Assuming stable savings efforts, we expect
global financial assets to grow by +6.5% in 2024. However, the medium-term
outlook is overshadowed by uncertainties about the two megatrends of AI and
sustainability. The potential of AI is undisputed, but it will probably be years
before the AI boom reaches the entire economy and leads to productivity
increases across the board. Disillusionment after the initial euphoria is already
noticeable. Similarly, the necessity of the green transformation is not disputed.
But the difficulties in terms of costs, technology and regulation are being
perceived more strongly again. The green boom in the economy and stock
markets is still a long time coming – but with the right (political) framework set,
it is still possible. This brings the biggest problem into focus: political uncertainty,
be it on a national level with the rise of extreme parties or on an international
level with several geopolitical crises and increasing fragmentation. Against this
background, only modest growth in global financial assets of +4-5% can be
expected over the next few years – albeit with high volatility: the economy and
markets are likely to oscillate between fear of crisis and euphoria about change.

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Debt stability
The rise in interest rates had a clear impact on the liabilities side of private
households‘ balance sheets in 2023: Growth in private debt weakened further to
+4.1% worldwide, the lowest growth in nine years. Overall, the global liabilities
of private households amounted to EUR56.8trn at the end of 2023. The decline
in debt growth was observed in almost all regions in 2023. It was particularly
pronounced in Western Europe and North America, where growth more than
halved to +1.1% and +2.9%, respectively. As nominal growth in global economic
activity remained elevated by inflation, the global debt ratio (liabilities as a
percentage of GDP) fell for the third year in a row, dropping by 1.5pps to 65.4%.
This was also more than 3pps lower than in 2003.

Debt outgrows financial assets in most emerging economies

Relatively strong growth in assets and relatively weak growth in liabilities led
to a significant increase of +8.8% in net financial assets (financial assets less
liabilities) in 2023. Overall, global net financial assets amounted to EUR182trn
at the end of 2023; this represents an increase of almost EUR15trn compared
to the previous year and is also EUR4trn above the previous record value from
2021. The development in the individual regions was almost synchronized:
strong growth was achieved everywhere, even in Japan (+6.2%). Comparing
the development of gross and net financial assets reveals a clear pattern: In
most emerging economies, net financial assets have grown significantly slower
than gross financial assets; in China, for example, the gap amounted to 1.5pps
per year. This growth gap implies that, on average, debt has grown faster than
assets in these countries. In the advanced economies, the opposite is true: debt is
growing more slowly and net financial assets are therefore growing faster than
gross financial assets.

Setback in real estate

In contrast to financial assets, real estate assets developed weakly in 2023: at
1.8%, the lowest growth in 10 years was recorded. There is no need to speculate
on the reasons for this: high construction costs and interest rates dampened
demand for houses. Overall, real estate assets in the countries considered here
amounted to EUR 140trn. Quite surprisingly, the value of real estate is more than
40% lower than financial assets in Japan and North America. Furthermore, the
real growth rates of real estate have lagged in most markets behind those of
financial assets; in North America, for example, the annual gap was almost 1 pp
over the last two decades, reflecting the fact that long-run capital gains for real
estate are lower than those for equities.

The invisible value destroyer: transition risk

Although natural catastrophes are much more visible, the long-term impact of
climate change on housing prices comes mainly through transition risk i.e. the
energy consumption of buildings, particularly for heating. Projections of the
House Price Index (HPI) in the UK under different climate scenarios up to 2050
show declines between -9.3% and -13.1%. For Germany, cumulative HPI declines
could be as high as -24.5%. This would imply per capita losses of EUR32,380.
Applied to all markets under consideration, home-owners could face losses of up
to EUR30trn. In the future, housing prices are set to be defined both by location
and energy efficiency.

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Global wealth distribution: Waiting until 2100

The concentration of financial assets on a global scale remains extremely
high. The richest 10% of the world‘s population – around 570mn people with
an average net financial assets of around EUR273,850 – together owned
85.7% of total net financial assets in 2023. At least the share has fallen over
time: two decades ago, it stood at 91.9%. But it is still much higher than at the
national level where the unweighted average of all countries was 61.1%. At the
pace of progress over the last two decades, it would take another 78 years to
reach a “normal” – i.e. comparable to the situation within countries – wealth
concentration at the global level.

Getting a seat at the table

However, the picture of global wealth distribution brightens somewhat if we
look not only at the richest 10%, but also at the development in the middle. The
number of the members of the global middle wealth class has risen sharply by
+78% to around 850mn over the past two decades. In this process, the share of
emerging economies has climbed from 43% to almost two-thirds. One in three
members of this class now comes from China and one in four from the rest of
Asia. The increasing participation of poorer countries in global prosperity is
reflected even more clearly in the composition of the global high wealth class:
last year, the share of emerging economies amounted to 34%; 20 years ago,
these countries had virtually no presence in this class, with a share of 1%.

The rich are getting richer – but the poor not getting poorer
At first glance, wealth concentration at national level has hardly changed: in
2003, the richest decile‘s share of net financial assets was 60.6% (unweighted
average); 20 years later it was 61.1% – an increase of 0.5pps. Unspectacular.
However, this conceals major changes in the individual countries, ranging
from a minus of 7.4pps to a plus of 16.4pps, with more countries seeing a rising
share than a falling one. The sharpest rise was recorded in China, reflecting the
challenge of reconciling the unleashing of growth forces with fair distribution.
However, despite rising wealth concentrations in many countries, the middle
class has remained stable in terms of numbers in the vast majority of countries.
The rich are getting richer, but this is not accompanied by a crumbling of
the middle; there is no evidence of a social decline of broad sections of the
population in the wealth data of recent years..

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Financial assets:
Surprising relief
In economic terms, 2023 turned out differently than Against this backdrop, the global financial assets of private
many expected. On the one hand, the expected households also recorded significant growth: With an
recession did not materialize in the US – primarily thanks increase of +7.6%, the losses of the previous year (-3.5%)
to US consumers‘ propensity to spend. On the other were more than made up for. Overall, total financial assets
hand, the recovery of the Chinese economy after the amounted to EUR239trn at the end of 2023 (Figure 1). While
long phase of Covid-19 lockdowns proved to be short- this exceeded the record set in 2021, financial assets relative
lived, with the ongoing problems in the real estate to economic activity (financial assets as a percentage of
market dampened sentiment. At the same time, the GDP) were still significantly lower at 275% (2021: 307%).
financial markets recovered strongly – despite interest This reflects the high price increases of recent years, which
rate hikes by the central banks of 100bps in the US, and inflated nominal GDP.
200bps in Europe. In the end it was not the interest rate
hikes that were decisive for markets but the question of
when the interest rate turnaround would end. In fact,
the US and European central banks carried out their
last interest rate hikes for the time being in July and
September 2023, respectively. This and the expectation
of future interest rate cuts led to great optimism on the
stock markets: US equities (S&P 500) achieved a strong
gain of +24% and even German equities (DAX) rose
by +20% – despite the shrinking economy. At the same
time, government bond yields fell (Europe) or remained
virtually unchanged (US).

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Figure 1: Surprising relief

Gross financial assets, in 2023 trn EUR and annual change in %

250 15.0

200 10.0

150 5.0

100 0.0

50 -5.0

0 -10.0

Gross financial assets Gross financial assets, y/y, in % (rhs)

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research

Growth in the three major asset classes – bank deposits, of the last ten years. In contrast, growth in bank deposits
securities (including investment funds) and insurance fell to +4.6% after the pandemic-related boom years,
policies/pensions – was quite uneven (Figure 2). Securities recording one of the lowest increases in the last 20 years.
(+11.0%) and insurance/pensions (+6.2%) benefited from This was mainly due to US households, which liquidated
the stock market boom and the decline in long-term bank deposits on a large scale, one reason for resilient US
interest rates, growing significantly faster than the average consumption.

Figure 2: Securities and insurance/pensions recover

Development of financial assets by asset class, annual change in %

20
15
10
5
0
-5
-10
-15
-20
-25
Deposits Securities Insurance & pensions

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research

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 24 September 2024

Huge differences in portfolio structures 7pps over bank deposits. Only the turnaround in interest
Globally, securities are by far the most important asset rates reversed the situation. The share of bank deposits
class. They accounted for 42.8% of global financial assets remained relatively stable over the long term, with an
in 2023.This share is only slightly below the record year increase of 1.8pps compared to 2003 (at the expense of
2021 (43.2%), but still above the figure before the global the category “others”).
financial crisis (2007: 41.0%), for example. Over the last
two decades, the importance of shares, investment funds However, the differences between countries and regions
and other securities has risen continuously, despite some are very large (Figure 3). Insurance/pensions, for example,
setbacks on the stock markets: overall, the portfolio share hardly play a role in Eastern Europe but they are the
increased by 6pps. dominant asset class in Australia and – albeit narrowly – in
Western Europe. The same can be said of bank deposits:
Conversely, the share of insurance/pensions has fallen by while they play only a minor role in America (North and
6pps to 26.6% over the same period, although this is partly South), they are the most popular savings vehicle in
due to the fall in value in the wake of the interest rate Eastern Europe and Asia – with the exception of China,
turnaround. Nevertheless, the fact that insurance/pensions where wealth management products are very popular.
– the preferred savings vehicle for financial provision for Americans, on the other hand, rely mainly on securities,
old age – are losing importance in rapidly ageing societies especially shares and investment funds. These different
is rather worrying. As a result, bank deposits were the portfolio structures once again demonstrate the strong
more popular savings vehicle in 2023 (as in 2022) with divergence in savings behavior worldwide.
a share of 28.0%. In all other years, however, insurance/
pensions were more important, at times with a lead of

Figure 3: Huge differences in portfolio structures

Gross financial assets, by asset class in 2023 EUR, in % of total gross financial assets

19.8 21.9 9.4

28.2 31.1 28.0 26.6
33.3
48.0
20.7 34.8
22.3
48.4 42.8
32.5
47.5 56.6
27.6
53.8 48.1
47.2
28.1 31.2 28.0
22.6 20.1
12.6

Asia ex JPN & China Japan AUS/NZ Eastern Western Latin North World
CHN Europe Europe America America
Deposits Securities Insurance & pensions Others

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research

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No place for bank deposits

In 2023, the normalization of savings continued after the – by +10.0%. However, there was a notable change of
pandemic-related boom years of forced savings. Last favorites within this asset class: While shares were sold
year, they fell by 19.3% to EUR3.0trn (Figures 4 and 5). in many markets after the miserable performance in
This means that (adjusted for inflation) they were roughly 2022, savers made strong gains in bonds, thanks to the
back at the level of the years before the pandemic. This turnaround in interest rates. This led, for example, to
decline is almost exclusively attributable to bank deposits: an +84.3% increase in securities purchases in Western
On balance, banks worldwide only received EUR19 bn, Europe – European savers have never been more fond of
a slump of -97.7%, which – as already mentioned – is securities, especially Italian savers, who rediscovered their
primarily due to US households: they liquidated deposits old love of government bonds.
worth EUR650 bn. However, it was not only the Americans,
but also Italian, Belgian and Spanish households that Finally, insurance/pensions proved to be relatively robust
shifted funds and withdrew deposits from banks on in the difficult environment of the interest rate turnaround,
balance. Only Japanese households remained loyal to their with the decline in fresh savings worldwide amounting
banks: At EUR101bn, Japanese bank deposits increased to just -4.9%. This was mainly due to the stability of cash
more than in any other country, closely followed by South inflows in the US. In Western Europe, on the other hand,
Korean (EUR95bn) and German deposits (EUR92bn). the decline was more than twice as steep at -13.7%;
households in the Eurozone in particular turned their
The other two asset classes, on the other hand, remained backs on insurance/pensions and invested less than
popular with savers. Inflows into securities even increased EUR100bn a year in this asset class for the first time.
once again – from their record level of the previous year

Figure 4: No place for bank deposits I

Flow of funds by asset class, in 2023 EUR trn

6.0

5.0

4.0

3.0

2.0

1.0

0.0

-1.0
Deposits Securities Insurance & pensions Others

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

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Figure 5: No place for bank deposits II

Flows by asset class and regions, in 2023 EUR, as % of total flows
120
100
80
60
40
20
0
-20
-40
-60
2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023
Global US Japan Western Europe

Deposits Securities Insurance & pensions

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research

Savings behavior is a decisive factor for asset growth. assets in Western Europe have doubled in the last two
This becomes clear when the composition of asset decades (+104%), the increase in the US is a whopping
growth is analyzed in more detail. There are basically +178%. However, it is not only savings behavior but also
two sources of growth in financial assets: savings efforts general market movements that play a role – again
and price increases (increase in value). Over the last 20 to the advantage of US households, who benefit from
years, increases in the value of portfolios in the US have the strong US stock markets. Above all, however, the
contributed an average of 62.4% to annual growth; in market environment is also reflected in the differences
Western Europe, this figure is 34.2% (in Germany, growth in financial assets between the generations. The Baby
over the long term is driven almost exclusively by savings). Boomers are therefore likely to be the richest generation
This significant difference certainly contributes to the fact that has ever lived, at least in the advanced economies
that long-term growth in financial assets is significantly (see box).
higher on the other side of the pond: While financial

Are Baby Boomers the wealthiest generation that ever lived?

Baby boomers, generally defined as those born between 1946 and 1964, are often considered the wealthiest
generation in history. A unique historical situation – strong economic growth, affordable housing markets and booming
equity markets – allowed them to build-up a handsome fortune.

Let‘s take a closer look at the accumulation of their financial wealth. We simulate the life savings of two exemplary
members of this generation, Sabine from Germany and Mary from the US, both born in 1960. In our analysis we
assume an average equity ratio of 45%, an annual savings rate of 10% and a savings phase of 40 years, starting at the
age of 20¹. Under these assumptions Sabine achieved an average nominal return of 6.1% per year resulting in total
savings of 614% of her disposable income at 60. This is already quite impressive, but is even significantly below Mary‘s
performance: Thanks to an equity risk premium around twice as high as in Germany, she generated lifetime savings of
over 850% of her disposable income with a return of 9.1%.

What’s in store for the generations X to Z?

All savers of the following generations are still in the process of building up their savings², like our exemplary members
of Gen X (born between 1965 and 1980), Michael from Germany and Christopher from the US, both born in 1974.
Although they still benefited from the flourishing 1990s, our calculations suggest they will end up with an average
annual return of 3.8 % and 6.7%, respectively, resulting in total savings of 417% and 606% of their disposable income.
This is well below the level of the Baby Boomers, but they still fared better than the Millenials (born between 1981 and
1996).
¹ For further details on the assumptions and calculation method please see 2024-04-11-Savers-Eurozone.pdf (allianz.com).
2
Therefore, we have to build assumptions on income and market developments for the next decades. To keep things simple, we basically extrapolate
past trends, ensuring comparability. It goes without saying, that radical different assumptions, say, AI turbo-charged income growth or anemic equity
markets due to global fragmentation, would alter the results. For different scenarios see below.
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This generation has had a rougher ride. Just as they were beginning to save, they were hit by one crisis after another.
Against this background, our exemplary German Millenial, Stefanie, born in 1984, had a doubly difficult start: Her
average disposable income grew at a disappointing +1.8% per annum over the first decade of her savings phase (against
the long-term average of +2.7%). This was compounded by the weak equity performance due to the global financial
crisis. With the beginning of the second decade, she slipped into the phase of low or zero interest rates. We expect her
average return after 40 years to be only 3.1% – roughly half of what our Baby Boomer Sabine raked in. For our American
Millennial Ashley, on the other hand, the difference in returns compared to Baby Boomer Mary is smaller, but still
significant (6.5% vs 9.1%). Stefanie’s total life savings will sum up to just over 430% compared with 614% for her parents‘
generation. According to our calculations, Ashley is likely to achieve savings of just under 670% of her disposable income
compared with around 850% for our Baby Boomer Mary.

Gen Z (born between 1997 and 2012) shares the same fate as Gen X and the Millennials: Even with the same savings
behavior, no generation can match the wealth accumulation enjoyed by the Baby Boomers (Figure 6.1). Maximilian, a
member of Gen Z in Germany and born in 2004, achieves total savings of 464% of his disposable income in 2063. This
result is better than Michael’s (+47pps) and Stefanie’s (+33pps), but significantly worse than Sabine’s (-150pps). In terms
of average total return, at 3.6% per year Maximilian ends up between Michael (3.8%) and Stefanie (3.1%), but also well
below Sabine (6.1%).

Figure 6.1: The older the better I

Germany: Total savings as % of disposable income and nominal return by generation, average in %

700 12.0
600 10.0
500
8.0
400
6.0
300
4.0
200
100 2.0

0 0.0
#10

#20

#30

#40

#10

#20

#30

#40

#10

#20

#30

#40

#10

#20

#30

#40

Sabine, Michael, Stefanie, Maximilian,

Babyboomer Gen X Millennial Gen Z
Total savings as % of disposable income after #years of saving
Annual average return after #years of saving (rhs)

Sources: Deutsche Bundesbank, Destatis, LSEG Datastream, Allianz Research

The results are similar for our American Gen Z member Jacob (Figure 6.2): Jacob’s total savings are expected to amount
to 766% of his disposable income in 2063. This result surpasses Christopher‘s by 159pps and Ashley‘s by 96pps, yet it falls
significantly short of Mary‘s by 86pps. Regarding the average total return, Jacob achieves 7.2% per year, outperforming
Christopher‘s 6.7% and Ashley‘s 6.5%, but still trails behind Mary‘s 9.1%.

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Figure 6.2: The older the better II

US: Total savings as % of disposable income and nominal return by generation, average in %

900 18.0
800 16.0
700 14.0
600 12.0
500 10.0
400 8.0
300 6.0
200 4.0
100 2.0
0 0.0
#10

#20

#30

#40

#10

#20

#30

#40

#10

#20

#30

#40

#10

#20

#30

#40
Mary, Christopher, Ashley, Jacob,
Babyboomer Gen X Millennial Gen Z

Total savings as % of disposable income after #years of saving

Annual average return after #years of saving (rhs)

Sources: Federal Reserve, LSEG Datastream, Allianz Research

The die is not yet cast

Gen X, Millennials and Gen Z are still in the process of building up their financial wealth and, to a certain extent, savers
are able to maximize their life savings. On the one hand, they can increase their savings efforts, i.e. their annual savings
rate, and on the other hand, they can invest a larger portfolio share in riskier but higher-yielding asset classes. Of course,
macroeconomic factors such as the interest rate environment or the level of the risk premium are beyond their control.
Nor can they fully determine the level or growth of their income.

We look at four different scenarios to see how they can adapt their savings behavior and react to changing framework
conditions. The aim is to achieve the savings-to-income ratio of our Baby Boomers Sabine and Mary at the end of the
savings period at 60. In scenarios #1 (“higher savings efforts”) and #2 (“higher risk appetite”), the economic framework
conditions remain unchanged. In scenario #1, savers only adjust their savings rate and in scenario #2 they additionally
adjust their risk profile towards riskier assets (equities)³. In our so called “green and AI boost” scenario #3, in which bond
yields, the equity risk premium and income growth rise, savers in turn only adjust their savings rate. The same applies to
scenario #4 (“permanent poly crisis”), in which – vice versa – bond yields, the risk premium and income growth fall.

Table 1 provides an overview of the necessary adjustment of the savings effort in order to catch up with the Baby
Boomers and the changes that result in the return achieved under the different scenarios. For Gen X, who only have a
decade left to build up their assets, this savings target can only be achieved with an extremely high savings effort: The
savings rates would have to almost triple. This is rather unlikely.

Even for the Millennials, who still have half of their savings phase ahead of them, achieving the savings target is likely
to be a challenge; even in the benign scenario #3, the savings rate should increase by more than 50%. For members
of Gen Z, however, who have only just started saving, the necessary increase in the savings ratio seems to be within a
manageable range. This generation (still) has the greatest possible flexibility to adjust their savings behavior.

3
However, the room to maneuver differs between the generations. Gen X, already in its last decade of asset accumulation and close to retirement,
cannot shift into equities but should keep a ratio of 30% (as assumed in the basic scenario). Gen Z, on the other hand, can alter its risk profile quite
substantially, having the longest investment horizon.

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Allianz Research

Table 1: Keeping up with the Baby Boomers – change in...

#1 #2 #3 #4
...average annual savings
rate (in pps) over the base Higher savings Higher risk Green and AI Permanent
case… efforts appetite boost poly crisis

Michael, Gen X +18.9 +18.9 +16.2 +22.6

Stefanie, Millennial +8.6 +8.1 +6.1 +11.5
Maximilian, Gen Z +3.3 +2.4 +1.3 +5.4

Christopher, Gen X +21.2 +21.2 +19.9 +25.4

Ashley, Millennial +7.0 +5.2 +6.0 +10.2
Jacob, Gen Z +1.1 -0.5 +0.5 +3.1

…and achieved total

nominal return (in bps) over
the base case
Michael, Gen X -- -- +23 -29
Stefanie, Millennial -- +10 +49 -55
Maximilian, Gen Z -- +44 +116 -120

Christopher, Gen X -- -- +17 -30

Ashley, Millennial -- +22 +34 -58
Jacob, Gen Z -- +172 +80 -131

Sources: Deutsche Bundesbank, Destatis, Federal Reserve, LSEG Datastream, Allianz Research

So are the Baby Boomers the wealthiest generation that ever lived?
For now, yes. But the future holds exciting potential for the generations that follow. Taking into account the end of the
savings glut and the rising demand for capital to drive the green and digital transformations, Gen Z actually has a
good chance to outperform all their predecessors – if they align their savings behavior to the new realities. And let us
not overlook an important fact: The day will come when the Baby Boomers bequeath their wealth to their children and
grandchildren. Projections indicate that, in the US alone, more than USD84trn in assets will be transferred to younger
generations by 2045, with over USD53trn of that wealth originating from Baby Boomer households⁴. This sets the stage
for Millennials to potentially become the richest generation in history – albeit not solely through their own endeavors.

4
See Cerulli Assciates, 2022: U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2021.

14
 24 September 2024

Exceptional China
In contrast to the “annus horribilis” of 2022, in which than China (+8.2%). Only Western Europe (+5.0%), where
financial assets shrank in many markets and regions – and the UK‘s weak performance (+1.5%) dampened growth,
also worldwide – the recovery in 2023 was broad-based and Eastern Europe (+18.0%), where hyperinflation
(Figure 7). In fact, only two countries – New Zealand and in Türkiye led to high (nominal) growth rates, were
Thailand – recorded negative growth rates that year. somewhat out of line.
Moreover, growth was relatively uniform across all regions,
not least in Asia and North America, which both grew by
over +8% – with the US (+8.6%) growing even more strongly

Figure 7: Uniform growth

Gross financial assets, CAGR 2004-2023 and growth 2023/2022, in %

Western Europe 3.9

5.0
Japan 2.0 CAGR 2004-2023
5.4
AUS/NZ 7.4 2023
6.9
WORLD 6.0
7.6
Asia ex JPN & CHN 8.8
8.1
China 15.4
8.2
North America 5.9
8.4
Latin America 11.5
9.2
Eastern Europe 11.0
18.0
0 2 4 6 8 10 12 14 16 18 20

*Compound annual growth rate, in 2023 EUR.

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

The long-term development over the last 20 years in Eastern Europe and Latin America. Only two markets
naturally shows greater differences, with the catch-up escape this development: Japan and China. Although real
effects of the emerging economies taking full effect: growth is lower here too, the discrepancy is not very large.
China, Latin America and Eastern Europe are achieving Per capita assets in Japan have actually grown slightly
double-digit growth rates per year, while Japan is only faster in real terms than in Western Europe over the last 20
growing at 2% and Western Europe at just under +4%. years. And the gap between China and the rest of the world
The development of financial assets in China in particular is huge in real terms: the growth advantage over the rest of
is breathtaking at first glance. Does this also stand up to the world is almost 10pps – per year! In fact, the purchasing
closer scrutiny, i.e. an adjustment for population growth power of average per capita financial assets in China has
and inflation? Figure 8 provides the answer. On a per increased tenfold in just 20 years. The closest countries to
capita basis, the annual growth rates are just under 1pp this progress are Bulgaria and Romania, which have seen
lower on average. This applies to all regions – with the an enormous increase in prosperity since EU enlargement:
exception of Japan, where per capita growth is slightly Real per capita financial assets have increased eightfold
higher thanks to the decline in population. Adjusting and sixfold respectively in this period. In India, the
for inflation has a much greater impact. Growth is then corresponding figure has increased fivefold.
halved worldwide, with inflation driving a large wedge
between nominal and real growth rates, particularly

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Allianz Research

Figure 8: Exceptional China

Gross financial assets per capita, nominal and real CAGR 2004-2023, in %

30
25
20
15
10
5
0
-5
-10
-15 Advanced Economies Emerging Markets

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

Lost years
However, inflation has only become really painful in low inflation rates – and real financial assets were
recent years, with double-digit rates in Europe, for 26.3% higher at the end of 2023 than in 2019, the trend
example. The real gains in prosperity are correspondingly in Western Europe was diametrically opposed: real
modest (Figure 9). At the end of 2023, real financial financial assets have shrunk in recent years and are
assets worldwide were only at the level of 2020 – the last now 4.3% lower than in 2019. European households
three years were lost years in this respect. Compared to can therefore look back on four lost years. The trend in
the pre-Covid year, however, there was still an increase of North America was not quite as bad: although it is still
+9.1%. Around a third of the nominal growth in this period below the 2020 figure, the increase compared to 2019
was retained, while two thirds fell victim to inflation. was +6.0%: Inflation did not eat up all of the growth in
financial assets, but “only” a good three-quarters.
But the regional differences are again large. While Asia
grew in real terms over the years – thanks to relatively

Figure 9: Inflation bites

Gross financial assets, nominal vs. real development (indexed, 2019=100) and average cpi (2020-2023, in %)

170 12
160
10
150
8
140
130 6
120
4
110
2
100
90 0
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023

Asia Latin America Eastern Europe Western Europe North America AUS/NZL Global
Nominal (lhs) Real (lhs) Average cpi, (rhs)

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

16
 24 September 2024

Exceptional US
In one respect, 2023 represented a return to the new or more between these groups of countries. In 2022, this
reality of de-globalization: The growth advantage of growth gap widened again, triggered by the market
emerging economies over advanced economies has turbulence caused by the interest rate turnaround, which
shrunk significantly again, amounting to just 2pps last mainly affected the US and Western Europe. As expected,
year (Figure 10). Until 2017, the year in which the trade however, this return of the gap appears to have turned out
disputes between the US and China broke out under to be just a “blip”.
President Trump, there was still a growth gap of 10pps

Figure 10: The new reality of de-globalization

Gross financial assets in 2023 EUR, annual change in %

30
25
20
15
10
5
0
-5
-10
-15 Advanced Economies Emerging Markets

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

The fact that emerging economies have largely lost their assets (Figure 11): North America‘s share has barely
growth lead in six of the last seven years is primarily changed in the last 20 years. The richest region in the world
due to developments in the US. During this period, the by far has kept its share largely constant – this once again
financial assets of US households not only grew twice as underlines the exceptional role that America plays in the
fast as in Western Europe, but also faster than the global area of finance. By contrast, the other developments were
average and roughly on a par with Chinese financial predictable: while China‘s share skyrocketed from 2.6% to
assets. The consequence of this performance is also 14.1%, Japan (-6.9 pps) and Western Europe (-9.3 pps) lost
reflected in the regional distribution of global financial significant ground.

Figure 11: Exceptional US

Gross financial assets, regional split 2003 and 2023, in 2023 EUR, in %

6.6
4.0
2023 North America
Western Europe
12.9 Japan
14.1
China
2003 48.7 47.7
Asia ex JPN & CHN
5.9 Latin America
28.5 AUS/NZ
Eastern Europe
19.1

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

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Allianz Research

American supremacy is also reflected in per capita 17th place is still rather disappointing in view of its high
financial assets, at least when looking at the averages: economic strength and savings performance, it is at least
in fact, only the Swiss are richer than the Americans. All one of the few Eurozone countries to maintain its ranking.
other countries follow at a respectable distance (Figure
12). Beyond the top 20, the picture is also relatively mixed.
This applies to Eastern Europe, for example, where the
Looking at this ranking, it is noticeable that the top ten is Baltic states Estonia (+6 to 26th place), Lithuania (+8
dominated by up-and-comers. Although Switzerland and to 29th place) and Bulgaria (+7 to 35th place) are big
the US have dominated the list of the richest countries “winners”, but Slovakia (-5 to 36th place) and Poland (-3
for years, they are followed mainly by countries that to 37th place) are also “losers”. The picture is similar in
have gained places over the last two decades, such as Asia: alongside China (+8 in 32nd place) and Vietnam (+8
Denmark (+3), Singapore (+4) and Canada (+4); only the in 49th place), there are countries such as Thailand (-9 in
Netherlands is out of line (-3). Places 10 to 20 are mainly 44th place) and Malaysia (-10 in 38th place).
occupied by relegated countries such as Japan (-10),
Italy (-8) and Belgium (-6). A word on Germany: although

Figure 12: The rich and the very rich

Gross financial assets per capita in 2023 EUR (change in ranking since 2003)

Switzerland (0) 382,910

United States (0) 314,930
Denmark (+3) 231,060
Singapore (+4) 216,990
Canada (+4) 177,050
Netherlands (-3) 177,040
Taiwan (+5) 176,340
Sweden (+8) 172,910
Australia (+4) 171,980
New Zealand (0) 160,700
Belgium (-6) 134,550
United Kingdom (-5) 118,360
Norway (+6) 116,510
Japan (-10) 113,150
Ireland (-1) 104,710
France (-1) 103,430
Germany (0) 95,030
Austria (0) 94,790
Italy (-8) 94,240
Malta (+2) 81,140
Finland (-1) 75,420
South Korea (+3) 70,550
Spain (-2) 59,290
Portugal (-1) 48,890
Czech Republic (+2) 42,030

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

Outlook
Global financial assets should continue to grow in 2024. economic growth this year will be at a similar level to last
This is supported above all by the positive trend on the year. This also applies to savings efforts, which we do not
stock markets (so far). However, the turbulence over the expect to decline further. These considerations lead us to
summer has also made it clear that prices are on thin ice expect global financial assets to grow by +6.5% in 2024.
and a continuation of the rally is by no means certain. A
correction before the end of the year cannot be ruled out. The medium-term outlook is of course characterized by
However, monetary policy should provide a tailwind. In even greater uncertainty. This applies not least to the two
view of the now significant decline in inflation, the most megatrends of AI and sustainability. The potential of AI is
important central banks will cut interest rates (further). undisputed, but it is just as undisputed that not all of the
This also seems appropriate against the backdrop of dreams will come true and that not all share valuations
renewed fears of recession. It is therefore likely that will prove to be justified. A certain disillusionment after

18
 24 September 2024

the initial euphoria is already noticeable. In addition, increasing fragmentation. The bottom line: In view of this
it will probably be years before the AI boom reaches mixed situation, only modest growth in financial assets of
the entire economy and leads to productivity increases +4-5% can be expected over the next few years – albeit
across the board. There are also increasing question with high volatility. The economy and markets are likely to
marks over the issue of sustainability and the green oscillate between fear of crisis and euphoria about change
transformation. Not because its necessity is disputed. for the foreseeable future.
But the difficulties in terms of costs, technology and
regulation are being perceived more strongly again. This
has already led to ESG investments performing worse
than the market in recent years, for example. The green
boom in the economy and stock markets is still a long
time coming – but with the right (political) framework
set, it is still possible. This brings the biggest problem
into focus: political uncertainty, be it at the national
level – keyword: the rise of extremist parties – or at the
international level – keyword: geopolitical crises and

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Allianz Research

Liabilities:
Expected restraint
The rise in interest rates had a clear impact on the
liabilities side of private households‘ balance sheets
in 2023: After the already strong dampener in 2022,
the growth in private debt weakened further to 4.1%
worldwide; this represents the lowest growth in nine
years (Figure 13). Overall, the global liabilities of private
households amounted to EUR 56.8trn at the end of 2023.
Figure 13: Expected restraint
Global private liabilities in 2023 trn EUR and annual change, in %

60 10
9
50 8
40 7
6
30 5
4
20 3
10 2
1
0 0

Liabilities Liabilities, y/y, in % (rhs)

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

The decline in debt growth was observed in almost all of hyperinflation in Türkiye. In this respect, another
regions in 2023. It was particularly pronounced in Western phenomenon in the region – debt growth in 2023 was
Europe and North America, where growth more than above the long-term trend – should also be viewed
halved (Figure 14). Latin American households also hit with caution. This phenomenon can otherwise only be
the debt brake relatively hard. However, their Eastern observed in Japan, albeit as a positive development:
European counterparts did not: at +14.4%, they recorded after years of deflation and some strong debt reduction,
the largest increase in liabilities by far in 2023. However, this private debt is also (slightly) increasing again in the
development is put into perspective against the backdrop

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 24 September 2024

face of higher inflation – good news for consumption and state, it can also be found in this dramatic slowdown
therefore Japan‘s prospects of escaping the deflationary in debt growth. The slight increase in 2023 is likely
spiral. In the rest of Asia, growth in 2023 and the trend are to be little consolation here; it does not yet signal a
roughly on a par. In most other markets, however, current turnaround.
debt growth is well below the average of the last 20 years.
Nowhere is this more true than in China, where private debt
has grown by an average of almost +20% year on year.
Together with the previous year, 2023 represents by far the
lowest growth recorded to date. If any further proof were
needed that China‘s real estate market is in a precarious

Figure 14: Emergency brake in China

Increase of private debt by region/country, in %

3.0
Western Europe 1.1 2022
3.3
2.4 2023
Japan 1.7
0.1
5.9 CAGR 2004-2023
North America 2.9
3.9
5.5
World 4.1
5.1
5.9
AUS/NZ 4.7
6.9
5.4
China 6.9
19.2
10.2
Asia ex JPN & CHN 9.2
9.0
15.0
Latin America 9.8
12.2
8.0
Eastern Europe 14.4
13.2
0 5 10 15 20 25

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

De-Westernization 2023. Western Europe and Japan are experiencing equally

Given the large discrepancies in long-term debt growth sharp declines. In fact, these three regions still accounted for
between advanced economies and emerging economies, 90% of all global debt 20 years ago, compared to just under
it is hardly surprising that there have been significant 65% today. The figure for financial assets is just under 73%.
shifts on the global debt map over the last two decades. This is mirrored by the development in Asia and especially
In contrast to financial assets, North America‘s position in China: its share of the global debt mountain has literally
has also “deteriorated” (Figure 15). Whereas 20 years exploded from 1.4% to 18% – despite the weak development
ago, 45.4% of all private liabilities were on the books in in the last two years. Chinese households now account for
North America, this figure was “only” 36.4% at the end of more than half of all private debt in Asia (including Japan).

Figure 15: De-Westernization

Private liabilities, regional split 2003 and 2023 (in 2023 EUR, in %)

3.6
4.7 2023 North America
12.2 Western Europe
9.4 36.4
4.4 China

45.4 Asia ex JPN & CHN

2003
Japan
AUS/NZ
18.0
32.7 Latin America
Eastern Europe

23.3

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

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Allianz Research

Despite the rapid growth dynamics and shifts on the per capita worldwide are Switzerland (EUR 127,470),
world debt map, the debt burden that households in the Norway (EUR 77,980) and Australia (EUR 72,480). In the
emerging markets have to shoulder is of course only a group of emerging economies, China is already in third
fraction of that incurred by households in industrialized place; only Chile (EUR 7,330) and Malaysia (EUR 8,820)
countries: the latter exceeds the former by a factor of 12 had higher debt per capita at the end of 2023.
(Figure 16). The three countries with the highest liabilities

Figure 16: Still a world apart

Private liabilities per capita 2023, in EUR

AUS/NZ 66,040
North America 54,540
Western Europe 31,140
Japan 21,210
China 7,170
Eastern Europe 3,100
Latin America 2,840
Asia ex JPN & CHN 2,240

Emerging Markets 3,360

Advanced Economies 38,960

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

No global private debt problem

More interesting than the absolute level of debt is, of risen by just 1.3pps; at 69.0%, however, it is still (just) below
course, the relation to economic output – because this the levels in Japan (70.1%) and North America (77.2%). The
indicator is ultimately decisive for debt sustainability, exception among the industrialized countries is Australia/
and therefore the question of whether or not a debt New Zealand, where the debt ratio rose by 19pp sto 111%.
crisis is imminent. Here the development – at least at the However, this figure is still below the previous high of 122%,
global level – does not look dramatic. In fact, as nominal which was reached in 2020.
growth in global economic activity remained at a high
level (+6.5%) in 2023, the global debt ratio (liabilities In most emerging markets, on the other hand, the debt
as a percentage of GDP) fell for the third year in a row, ratio has risen sharply over the last two decades. At the top
dropping by 1.5pps to 65.4% (Figure 17). This means that of the list is China, where the ratio has almost quadrupled
the global debt ratio was also more than 3pps lower than to a good 64%; in the other emerging market regions of
in 2003 – a remarkable stability that masks a sharp rise in Latin America and Eastern Europe, it has “only” doubled
the run-up to the global financial crisis, but still hardly fits and still remains at a relatively moderate level. A word on
the widespread narrative of a world drowning in debt. The the rest of Asia, whose relative stability (+7.2pps) is perhaps
latter is not the case for private households as a whole. somewhat surprising in this context. This is primarily a
statistical phenomenon: Over the years, the weight of the
However, there are again major differences between poorer and even less indebted countries has increased,
the regions. First and foremost, stability characterizes which has dampened the regional increase; in addition,
the development in advanced economies such as North there has been a sharp decline in Singapore. The picture
America, Japan and Western Europe. In the first two is different at country level: In many countries such as
regions, there has even been a sharp decline (-8.4pps and India, the Philippines and Vietnam, debt has risen rapidly
-6.9pps respectively), while the rate in Western Europe has in relation to economic output. In Vietnam, it is already

22
 24 September 2024

above the 50% threshold at 53.1%, while in India (47.0%) debt crisis on the part of households, this does not apply
it is only just below. The private debt ratio in a dozen to all countries. In some Asian emerging economies in
countries worldwide is now higher than that of the US. particular, the debt dynamics of recent years give cause
These include not only rich countries such as Switzerland, for concern.
Denmark and Australia, but also South Korea (103.6%),
Taiwan (93.5%), Thailand (91.3%) and Malaysia (80.9%).
The bottom line: Even if there is no threat of a global

Figure 17: No global private debt problem

Private liabilities as % of nominal GDP, by region/country

125

100

75

50

25

0
China Japan Asia ex JPN AUS/NZL Eastern Western Latin North World
& CHN Europe Europe America America

2003 2008 2013 2018 2023

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

A truly good year for all

Relatively strong growth in assets and relatively weak The development in the individual regions was almost
growth in liabilities led to a significant increase in synchronized: Strong growth was achieved everywhere,
net financial assets (financial assets less liabilities) in even in Japan, where the growth rate of +6.2% was well
2023: The 8.8% increase more than made up for the above the long-term trend (Figure 18). It is also striking that
previous year‘s losses. Overall, global net financial North America achieved the strongest growth, beaten only
assets amounted to EUR 182trn at the end of 2023; this by Eastern Europe (for the reasons already mentioned). This
represents an increase of almost EUR 15trn compared to strong development resulted in North America‘s share of
the previous year and is also EUR 4trn above the previous global net financial assets reaching 51.2% in 2023; i.e. every
record value from 2021. second euro (less debt) was in the hands of North American
households.

Figure 18: A truly good year for all

Net financial assets, CAGR 2004-2023 and growth 2023 / 2022, in %

Japan 6.2
2.5

Western Europe 6.6 2023

4.2

Asia ex JPN & CHN 7.6 CAGR 2004-2023

8.7

AUS/NZ 8.4
7.8

China 8.7
14.3

WORLD 8.8
6.4
Latin America 9.0
11.3
North America 9.7
6.5
Eastern Europe 19.3
10.4
0 5 10 15 20 25

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

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Allianz Research

Once again, it is worth adjusting these data for population the other emerging market regions, where a doubling
growth and, above all, inflation (Figure 19). At first can be observed. Among the advanced economies, it is
glance, the picture is very similar to that of gross financial noticeable that Western Europe is once again lagging
assets. China is the undisputed leader, with net per behind Japan, with the gap of just under 0.4 pps being
capita financial assets, adjusted for purchasing power, even more pronounced than in the case of gross financial
having increased more than sevenfold in the last two assets.
decades. No other region can keep up here, not even

Figure 19: China remains on top – by a wide margin

Net financial assets per capita, nominal and real CAGR 2004-2023, in %

Japan 2.0
2.6 real nominal
Western Europe 1.6
3.8
World 2.6
5.5
North America 2.7
5.6
AUS/NZ 3.4
6.4
Asia ex JPN & CHN 3.2
7.4
Eastern Europe 3.4
10.1
Latin America 4.8
10.3
China 10.6
13.8
0 2 4 6 8 10 12 14 16

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

What does the comparison of the development of gross the growth advantage of gross financial assets is lower
and net financial assets show? A clear pattern can be than in Japan, but also in North America. This is due to the
seen here: In the emerging economies, real net financial great heterogeneity of the Old Continent in dealing with
assets have in some cases grown significantly slower private liabilities: on the one hand, there are countries
than real gross financial assets in recent years; in China, such as Ireland (+1.3pps), Spain (+0.8pps) and Portugal
for example, the gap amounted to 1.5 pps per year. This (+0.8pps), which had to massively reduce liabilities after
growth gap implies that, on average, debt has grown the euro crisis; Germany (+1.0pps) and the Netherlands
faster than assets in these countries. In the advanced (+0.3pps) also belong to this group. On the other hand,
economies, the opposite is true: debt is growing more countries such as Finland (-1.3pps), Greece (-0.8pps) and
slowly and net financial assets are therefore growing Belgium (-0.6pps) have seen their debts grow faster than
faster than gross financial assets. This is particularly true their assets on average over the last 20 years.
of Japan (Figure 20). A word on Western Europe, where

Figure 20: Debt restraint in advanced economies

Difference of per capita net and gross financial assets‘ real CAGR 2004-2023, in pps

China -1.5
Eastern Europe -0.7
Asia ex JPN & CHN -0.2
Latin America -0.1
World 0.1
Western Europe 0.2
AUS/NZ 0.2
North America 0.3
Japan 0.4
-2 -2 -1 -1 0 1

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

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 24 September 2024

Where is the development of net financial assets There are also changes in the other places. For example,
heading? Figure 21, the ranking of the richest 25 Italy (+5) and New Zealand (+4) performed significantly
countries by per capita net financial assets at the end better; Spain (+3) also improved significantly. On the
of 2023, provides some insight. It no longer shows other hand, Norway (-9) plummeted; the decline in the
Switzerland in first place, but the US. This is due to the Netherlands and Canada (-3 each) was not quite as
high per capita debt in Switzerland (EUR 127,470), which dramatic.
is more than twice as high as in the US (EUR 54,610).

Figure 21: Leadership change

Net financial assets per capita in 2023 EUR (in brackets change to rankings in gross financial assets per capita)
United States (+1) 260,320
Switzerland (-1) 255,440
Denmark (0) 172,200
Singapore (0) 171,930
Taiwan (+2) 148,750
New Zealand (+4) 127,430
Sweden (+1) 125,660
Canada (-3) 123,130
Netherlands (-3) 117,270
Belgium (+1) 104,040
Australia (-2) 99,490
Japan (+2) 91,940
United Kingdom (-1) 80,110
Italy (+5) 76,930
Ireland (0) 74,450
France (0) 72,380
Austria (+1) 70,410
Germany (-1) 69,060
Malta (+1) 58,730
Spain (+3) 43,690
South Korea (+1) 39,140
Norway (-9) 38,530
Finland (-2) 37,090
Czech Republic (+1) 31,910
Portugal (-1) 31,460

Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, Allianz Research.

25
Allianz Research

Real Estate: setback

In contrast to financial assets, real estate assets⁵ construction costs and interest rates dampened demand
developed extremely weakly in 2023: at +1.8%, they for houses. Overall, real estate assets in the countries
recorded the lowest growth in 10 years since the considered here amounted to EUR140trn.
aftermath of the global financial crisis, during which real
estate values even fell for two years in a row (Figure 22).
There is no need to speculate on the reasons for this: High

Figure 22: Setback

Real estate, in 2023 trn EUR and annual change in %
160 14
140 12
10
120
8
100 6
80 4
60 2
0
40
-2
20 -4
0 -6

Real estate assets Real estate assets, y/y, in % (rhs)

Sources: Eurostat, national central banks and statistical offices, IMF, LSEG, OECD, Allianz Research.

5
Due to insufficient data, the analysis only covers around half of the countries included in the financial assets. The regions of Asia and Latin America
are therefore not shown. For Western Europe, data is missing for Greece, Portugal, Malta and Ireland. The Eastern Europe aggregate does not inclu-
de: Croatia, Kazakhstan, Latvia, Romania, Russia, Serbia and Türkiye. If not available, 2023 values were estimated based on the OECD house price
index.

26
 24 September 2024

This means that real estate assets were 22% lower than these regions (Figure 23). However, this was not the
the gross financial assets of this group of countries case in Japan (-42%) and North America (-41%) – which
(EUR180trn). This is surprising as real estate assets accounts for around half of all real estate assets included
– usually the owner-occupied house – are generally here. The reasons for this are probably different: While in
regarded as the largest asset item on a household‘s Japan the cause is the decades-long fall in house prices
balance sheet. This is also true for Australia, Eastern and since the bubble economy burst, in the US the very high
Western Europe: On average, real estate values were 51%, level of financial assets plays the decisive role.
22% and 21% higher than financial assets, respectively.
Real estate clearly dominates total asset ownership in

Figure 23: Real estate is not king everywhere

Share of real estate and financial assets in total wealth, in %

39.9 45.0 45.2

56.2
63.2 62.8

60.1 55.0 54.8

43.8
36.8 37.2

Japan AUS/NZ Eastern Europe Western Europe North America WORLD

Real estate Financial assets

Sources: Eurostat, national central banks and statistical offices, IMF, LSEG, OECD, Allianz Research.

Price trends were also inconsistent in the individual after years of decline in a deflationary environment. In
markets. On the one hand, the markets in North America, Western Europe, on the other hand, the fall in property
Australia/New Zealand and Eastern Europe defied the prices reflects the rise in interest rates, a market reaction
interest rate turnaround and were still able to achieve straight out of the economic textbook. In some countries,
significant growth in 2023, even exceeding long-term such as Germany (-8.4%) or Sweden (-7.8%), the slump
growth rates (Figure 24). The shortage of supply is was particularly severe. In fact, only Italy, Spain and
likely to have played a stabilizing role here. Japan has a Switzerland were able to escape the downward pull and
special role to play in this context: the relatively strong post positive growth rates; the UK at least managed to
increase in 2023 primarily signals the hope of recovery break even.

Figure 24: Different market reactions to rising rates

Real estate, CAGR 2004-2023 and growth 2023 / 2022, in %

WORLD 3.1
1.8 CAGR 2004-2023

4.3 2023/2022
North America
4.7

Western Europe 2.0

-2.2

Eastern Europe 4.3

5.7

AUS/NZ 4.3
6.7

Japan 0.7
3.1
-3 -2 -1 0 1 2 3 4 5 6 7 8

Sources: Eurostat, national central banks and statistical offices, IMF, LSEG, OECD, Allianz Research.

27
Allianz Research

Low returns
Similar to the approach used to analyze financial assets, is also in line with research, which states only low long-
we also look at the development of per capita assets run capital gains of around 1% per year for real estate
after deducting inflation (Figure 25). Unsurprisingly, the – in contrast to equities⁶. Western Europe is an exception
trend in Japan was miserable: After deducting minimal in this respect, where the real growth rates for real estate
inflation, real estate has on average caused its owners to and financial assets were exactly the same – which was
cope with losses over the last 20 years. In the other three primarily a consequence of the weak growth in financial
regions we examine here, the picture is more pleasing assets. The trend is unlikely to improve in the coming
– but not exhilarating either. In North America and years. On the contrary: climate change and the fight
Australia/New Zealand, for example, the real growth against it are likely to have a significant impact on house
rates of real estate have lagged behind those of financial prices (see box: climate change and housing prices).
assets (see Figure 8); in North America, the annual gap
was almost 1 pp over the last two decades. However, this
Figure 25: Low returns
Real estate per capita, nominal and real CAGR 2004-2023, in %

-0.3 real nominal

Japan
0.3

1.4
Western Europe
3.6

1.6
North America
4.2

2.8
AUS/NZ
5.5

-1 0 1 2 3 4 5 6

Sources: Eurostat, national central banks and statistical offices, IMF, LSEG, OECD, Allianz Research.

A small consolation for Japanese property owners: recent years has eroded real estate values. This also applies
in recent years, real estate has at least been able to to the other two regions, which have seen real value losses
increase its real value slightly: At the end of 2023, it was since 2021. Compared to the pre-Covid year 2019, however,
+3% higher than in 2019 (Figure 26). Japanese real estate there is still a big plus: In real terms, gains of 22% (North
thus performed even better than Western European America) and 27% (Australia/New Zealand) were achieved.
real estate, where the increase was only 2.4%. Above all,
however, these figures show how the high inflation of
Figure 26: Dismal years
Real estate, nominal vs. real development (indexed, 2019=100) and average CPI (2020-2023, in %)
150 12

140 10

130 8

120 6

110 4

100 2

90 0
2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

2019

2020

2021

2022

2023

Japan AUS/NZL Western Europe North America World

Nominal (lhs) Real (lhs) Average cpi, (rhs)

Sources: Eurostat, national central banks and statistical offices, IMF, LSEG, OECD, Allianz Research.

6
See Oscar Jorda et al. (2019), The rate of return on everything 1870 -2015, NBER Working Paper Series, 24112; or R.J. Shiller (2000), Irrational Exu-
berance, Princeton. Of course, this does not take into account the (implicit) rental yield, which is likely to play the decisive role for most homeowners.

28
 24 September 2024

In the ranking of countries with the highest real estate Austria (+5) are two markets that are now significantly
assets, Switzerland (EUR 322,470) is ahead of Australia better positioned; Austria even makes it into the top
(EUR 266,340) and New Zealand (EUR 179,660); the 10. France and Germany (+3 each) are also among the
USA (EUR 179,410) is only in fourth place. What does “winners”. However, there are also relegated markets,
the ranking look like when net financial assets and real above all Japan (-7) and Sweden (-6). However, not
estate assets are presented together? Figure 27 provides much has changed for the majority of markets, which
the answer. In some cases, there are serious shifts. have maintained their positions or only improved /
Switzerland at the top by a large margin, with an average deteriorated marginally.
lead over the US of EUR 138,170. Australia (+6 ranks) and

Figure 27: Switzerland rules

Net financial and real estate assets per capita (in 2023 EUR)

Switzerland (2) 577,910

United States (1) 439,740
Australia (9) 365,830
New Zealnd (4) 307,090
Denmark (3) 276,130
Canada (6) 276,010
Netherlands (7) 274,100
Belgium (8) 268,100
Austria (14) 224,010
France (13) 214,980
Sweden (5) 211,740
Germany (15) 201,240
United Kingdom (11) 200,970
Norway (18) 200,760
Italy (12) 182,710
Spain (16) 181,310
Japan (10) 158,580
South Korea (17) 145,390
Finland (19) 129,690
Slovenia (21) 86,970

In brackets: Rank by net financial assets per capita (adjusted for the missing markets).
Sources: Eurostat, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, OECD, Allianz.
Research.

29
Allianz Research

Climate change and house prices

The frequency and severity of natural disasters have increased in recent years, driven by climate change. This trend is
expected to continue, even under the best assumptions. For example, under an orderly transition (RCP2.6) meeting Paris
Agreement goals by 2050, hurricane costs are projected to rise by +12%, +14%, and +15% in Florida, Louisiana and North
Carolina, respectively. In the worst-case scenario, costs will increase between +41% (Florida) and +53% (North Carolina)
(Figure 28). These natural catastrophes will have a profound impact on the housing market, influencing property values,
insurance costs and overall market dynamics.

Homeowners affected by disasters often face immediate losses, including damage to their homes and possessions. But
there also longer-term effects as the perception of future storms changes. Considering these households’ perceptions
of hazards damages, an analysis reveals a persistent negative effect on flood-zone housing values in the aftermath of
hurricane Sandy in New York (October 2023), with even non-damaged properties showing an -8% price penalty by 2017
and damaged properties experiencing an immediate -17-22% drop, followed by only a partial recovery⁷. In general,
houses exposed to sea levels rising sell for about -7% less than similar properties that are not exposed⁸. But this effect
works also the other way around as well, as new buyers place higher value on adaptation measures. For example,
before hurricane Katrina (New Orleans, August 2005), the elevation of properties in flood-prone areas had a minimal
effect on selling prices, adding only about 1.4% per foot. However, after Katrina, the significance of elevation became
much more evident. Water-level marks allowed buyers to better gauge elevation, resulting in a +4.6% price increase per
foot in areas affected by flooding.

The impact of natural catastrophes on the wider housing market is further complicated by the ensuing market dynamics.
Housing markets within exposed areas display a temporary negative supply shock. This supply shortage can drive up
prices in the short term. For instance, a study reveals that home prices in hurricane-exposed areas increase by +5% on
average in the three years following a hurricane, peaking at +10% in the second year, compared to unexposed areas.
Concurrently, the probability of home transactions in these exposed areas drops by -7% from the baseline.⁹ However,
prices tend to normalize as supply levels recover over time. But hurricanes, disrupting local economies, can have also
an effect on housing demand, as income levels are lowered. In that case, the overall net effect remains uncertain. The
bottom line: It is clear that exposure to natural catastrophes will play an increasing role in housing markets. However, it is
less clear how this will impact the general level of housing prices. It cuts both ways.

Figure 28: Gone with the wind

Evolution of hurricane driven damages to households’ wealth in three US states, under historical observations and climate change scenarios, 2020 bn
USD

200 181.7
Sum of damages to total households'

180 160.1
160 144.6
140 129.0
wealth, 2020 bn USD

120
100
80
45.5 52.4
60 40.5
35.4
40 17.6 20.7
13.5 15.5
20
0
2010-2023

2010-2023

2010-2023
2050 - RCP2.6

2050 - RCP4.5

2050 - RCP8.5

2050 - RCP2.6

2050 - RCP4.5

2050 - RCP8.5

2050 - RCP2.6

2050 - RCP4.5

2050 - RCP8.5

Florida Louisiana North Carolina

Sources: CLIMADA, Allianz Research.

7
https://www.sciencedirect.com/science/article/abs/pii/S0094119018300354
⁸ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3073842
9 https://www.dallasfed.org/~/media/documents/research/papers/2010/wp1009.pdf

30
 24 September 2024

Therefore, the bigger impact on housing prices might be come from transition risks. Although transition risks are not as
immediately pressing as physical risks for real estate, they are still significant. The primary way these risks impact real
estate is through the energy consumption of buildings, particularly for heating.

Many regions have revised their building codes to require new constructions to meet higher energy-efficiency standards
and use renewable energy for heating. While older buildings are sometimes exempted from these rules, this is not
always the case. The UK‘s Minimum Energy Efficiency Standard (MEES) exemplifies how buildings can be subject to
transition risks10. The UK assigns an Energy Performance Certificate (EPC) rating to properties, ranging from A to G, with
G being the least efficient. As of 2018, the average EPC rating for rental properties was E. Under the MEES regulation,
starting from April 2018, properties with ratings F or G could not be rented out under new leases, and this rule expanded
to include existing leases from 2023, with penalties for non-compliance.

Figure 29 illustrates the projected impact of the energy transition on the House Price Index (HPI) in the UK between 2022
and 2050, using two scenarios from the NGFS: the Below 2°C (orderly transition) and the Delayed Transition (disorderly
transition). The analysis reveals that, compared to a baseline scenario with no climate change, the HPI in the UK is
expected to decline by -9.3% under the Below 2°C scenario and by -13.1% under the Delayed Transition scenario. Given
today’s value of British private households’ real estate stock of EUR8.3trn, these declines would wipe out EUR770bn
and EUR1,1trn, respectively or EUR11,240 and EUR15,840 in per capita terms. These projections align with NGFS data
for Germany, where cumulative HPI declines of -18.1% (EUR2.2trn or EUR23,920 per capita) and 24.5% (EUR2.7trn or
EUR32,380 per capita) are expected under the Below 2°C and Delayed Transition scenarios, respectively. Applied to all
markets under consideration, homeowners are in for losses of up to EUR30trn. These strong declines would be triggered
by the steep fall in the prices of energy-inefficient buildings, depressing the overall market. In future, housing prices are
set to be defined less by location and more by energy efficiency.

Australia‘s transition under the Below 2°C scenario is expected to have a minimal impact, with some projections even
suggesting a slight positive effect on the economy. This contrasts with countries such as Germany and the UK, where
the transition may be more challenging. The key factor is Australia’s sharp decline in energy consumption, driven by its
ambitious climate policies under the Below 2°C scenario. Central to these policies is a rapid increase in carbon pricing,
set to rise more quickly and to higher levels by 2050 than in the EU and UK..

Figure 29: The cost of energy efficiency (or the lack of)
Cumulative decline in the House Price Index (HPI) due to transition risks from 2022 to 2050, expressed as a percentage. The analysis is based on
NGFS NiGEM-REMIND data, comparing two scenarios: Below 2°C and Delayed Transition. Results are shown relative to a baseline scenario with no
climate change.
55 Below 2°C
Delayed Transition
Cumulative HPI loss compared to non-

45
climate scenario (baseline) in %

35

25

15

-5
UK Germany Australia France Italy Spain Austria Switzerland

Source: Allianz Research.

10 https://www.ricsfirms.com/glossary/minimum-energy-efficiency-standard/

31
Allianz Research

Distribution: Progress is in
the eye of the beholder
The international perspective: Concentration at the top For the second richest decile, only 9.1% of the total remains;
The concentration of financial assets on a global scale average net financial assets amount to EUR29,790. But
remains extremely high. This becomes clear when the for the bottom half of the population, comprising 2.9bn
total population of the countries we analyze is broken people, almost nothing is left. However, this figure should
down by population decile on the basis of net financial be interpreted with caution as the people in the 10th decile
assets. are on average indebted people from the richest countries,
resulting in negative net financial assets. But high debt
This shows that the richest 10% of the world‘s does not necessarily equate to poverty. A new homeowner
population – around 570mn people in the countries or freshly minted graduate from one of the top universities
under consideration with average net financial assets might have more debt than financial assets but is certainly
of around EUR273,850 – together owned 85.7% of total not poor. In fact, they are likely to move into the top echelon
net financial assets in 2023. At least the share has fallen of asset owners over time. More concerning is the fact that
over time: two decades ago, it stood at 91.9%. But it the deciles 5 to 9 own no assets to speak of.
still is much higher than at the national level, where
the unweighted average of all countries was 61.1%. As a result of this high global wealth concentration, there
At the pace of progress over the last two decades, it is also a large gap between the global median and the
would take another 78 years to reach a “normal” wealth global average of net financial assets. While the median of
concentration at the global level – i.e. comparable to the net financial assets in 2023 was EUR1,920 per capita, the
situation within countries. average was almost 17 times higher (EUR32,170). Again,

32
 24 September 2024

the comparison to the national figure (unweighted lowest deciles than in the two richest deciles (Figure 30).
average of all countries) is revealing: the relation However, given the huge absolute differences between the
between average and median is much lower within deciles, even with high growth differentials, a more equal
countries at 3.1. distribution of wealth at the global level remains a distant
dream. A word about the 1st decile with the lowest net
At first glance, it seems encouraging that average financial assets. Its negative growth rate implies a decline in
net wealth per capita grew much faster in the their „net financial assets“ – because debt kept rising.

Figure 30: Catching up?

Growth of average net financial assets per capita per decile, 2023/2003 in %

1,000

800

600

400

200

0
1 2 3 4 5 6 7 8 9 10
-200

-400

Sources: Eurostat, ECB, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, World Ine-
quality Database, Allianz Research.

A growing and more diverse middle class Looking at the development of the global middle wealth
However, the picture of global wealth distribution class, two observations stand out in particular: Firstly,
brightens somewhat if we look not only at the richest the number of its members has risen sharply by 78% to
10%, but also at the development in the middle. To around 850mn over the past two decades; secondly, the
do this, we divided the population in the countries share of emerging economies has climbed from 43% to
we examined into three wealth classes, analogous to almost two-thirds. The increasing participation of poorer
the approach at the national level. This is based on countries in global prosperity is reflected even more
the assumption that we all live in a “global village” clearly in the composition of the global high wealth class:
in which each inhabitant can be assigned to different last year, the share of emerging economies amounted
classes based on their relative wealth. Accordingly, the to 34%; 20 years ago, these countries had virtually no
classification in wealth classes is based on worldwide presence in this class, with a share of 1%. In contrast, the
average net financial assets per capita, which stood global low wealth class only grew by just under 8% (to
at EUR32,170 in 2023. The global wealth middle class 4.260mn), with a general population growth of +18.4%
(“middle wealth”, MW) includes all individuals with in the group of countries examined here. These three
assets of between 30% and 180% of the global average. wealth classes will be examined in more detail below.
This means that for 2023, asset thresholds for the global This provides a differentiated picture of how the global
wealth middle class are EUR9,700 and EUR57,900. The distribution of wealth has shifted in recent years.
“low wealth” (LW) category, on the other hand, includes
those individuals with net financial assets that are below
EUR9,700, while the term “high wealth” (HW) applies to
those with net financial assets of more than EUR57,90011.

11 For more details on how the asset thresholds are set, see Appendix A.

33
Allianz Research

The changes in the global middle wealth class are particular, more clearly than these figures. Mirroring this,
immediately apparent (Figure 31). One in three members the shares of the other regions have fallen sharply, which
of this class now comes from China and one in four from is primarily due to the rapid growth of this wealth class – in
the rest of Asia (excluding Japan). At the start of the both absolute and relative terms, this class has grown in all
millennium, the two regions together accounted for just regions. There is only one exception: Latin America, where
over a third of this asset class. This means that 20% of the number of members of this wealth class declined, albeit
Chinese people now belong to the global wealth middle in favor of the global high wealth class.
class, twice as many as 20 years ago. In the rest of Asia,
this share is now just under 9%, compared with only 2%
in 2003. Nothing illustrates the rise of Asia, and China in

Figure 31: The middle speaks Chinese

Global middle wealth class, members by region in %

5.5
9.9
10.9 7.6 24.8 2023
Asia ex JAP & CHN
China
14.1
27.0 Latin America
18.5 2003 Eastern Europe
Western Europe
North America
25.8 6.8
5.2 Others
7.7
2.8 33.4

Sources: Eurostat, ECB, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, World Ine-
quality Database, Allianz Research.

The pattern is repeated in the global high wealth class North America has been able to maintain its international
(Figure 32), at least with regard to China: many Chinese position, Western Europe has lost considerable ground –
have managed to climb into this class, with 23.4% of its fewer Western Europeans can feel that they belong to the
members now recruited from China (population share global high wealth class today than 20 years ago.
around 10%); 20 years ago, China played virtually no
role in this wealth class. However, North America still In the three emerging regions – Asia (ex Japan & China),
accounts for the largest contingent, even if its share Latin America and Eastern Europe – the number of
has fallen sharply to 30.8%. In absolute terms, however, members of the global high wealth class has risen sharply
the global high wealth class (like the middle class) has in each case. However, while the population share also
continued to grow in North America; its share of the increased in the latter two regions, it remained largely
population has hardly changed at 49%. This is where stable in Asia (only the wealth middle class increased
the North American trend differs from that in Western proportionately here). However, Eastern Europe and Latin
Europe: Here, the number of members has fallen America did not develop in sync either. In Eastern Europe,
in absolute terms and their share of the population both the high and middle wealth classes benefited, while
has fallen sharply from 38.0% (2003) to 29.6% (2023) in Latin America only the former – an indication of greater
(mainly in favor of the middle wealth class). So while polarization in the distribution of wealth, with the middle
class shrinking.

34
 24 September 2024

Figure 32: Western Europe is losing ground

Global high wealth class, members by region in %

4.1
11.4

5.0 2023
17.7 Asia ex JAP & CHN
23.4
China
Latin America
2003 36.9 Eastern Europe
30.8
Western Europe
5.9
North America
39.6
3.7 Others

20.8

Sources: Eurostat, ECB, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, World Ine-
quality Database, Allianz Research.

Finally, the low wealth class (Figure 33). At first glance, also recorded, this decline was only half as large in Latin
there appear to be few shifts in this class. China‘s share America (-3.7 pps to just under 88%) – as the absolute
has fallen slightly, reflecting both the absolute (-14.5%) figures continued to rise. The same also applies to the
and relative (population share from around 90% to two advanced regions of North America and Western
just under 70%) decline in this wealth class in China. By Europe – with one key difference, however: even though
contrast, the share of the rest of Asia (excluding Japan) the absolute increase was almost identical in both
increased slightly, as the number of members of the regions at 18.8% and 19.0% respectively, this led to
global low wealth class in the region also rose (+19.9%); diverging results for the share of the global low wealth
however, this is solely due to the strong population class due to the different general population growth: in
growth, with the population share falling by 7 pps to Western Europe it climbed by as much as 3 pps (to just
90%. Developments in the two other emerging regions of under 34%), while in North America it remained stable
Latin America and Eastern Europe also differed. While at 29%. This confirms the picture from the analysis of the
the population share in Eastern Europe fell relatively global high wealth class: the Old Continent has become
sharply, by 7.4 pps to 81.5%, as an absolute decline was “poorer” on a global scale.

Figure 33: Population growth overshadows shifts

Global low wealth class, members by region in %

2.6
3.4
7.0 2023
Asia ex JAP & CHN
7.7
China
10.2 9.4 Latin America
45.9
2003 51.1 Eastern Europe
Western Europe
North America
29.5 Others
23.4

Sources: Eurostat, ECB, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, World Ine-
quality Database, Allianz Research.

35
Allianz Research

The national perspective: No general trend The largest group comprises the countries in which the share
At first glance, wealth concentration at national level of the top decile has increased (23 countries). In eight of
has hardly changed: In 2003, the richest decile‘s share these countries, the increase was significant (over 4 pps).
of net financial assets was 60.6% (unweighted average These include mainly the “usual suspects” such as the US,
of the countries considered here), 20 years later it was Brazil, Mexico and India. A word about China: Nowhere has
61.1% – an increase of 0.5 pps. Unspectacular. However, the wealth share of the richest 10% risen more sharply (+16.4
this conceals major changes in the individual countries, pps). The reasons are obvious: The enormous economic and
ranging from a plus of 16.4 pps to a minus of 7.4 pps social changes of the last 20 years have not only contributed
(Figure 34). In fact, only 18 countries (out of a total of to an immense increase in wealth in general, but also
57) are stable in this respect, with wealth concentration to the emergence of a genuine “upper class”; at 68.8%,
having changed by less than 1 pp. This group of countries wealth concentration in China is now well above the global
mainly includes Western and Eastern European countries, average. China shows how difficult it is to reconcile the
where wealth concentration is relatively low; Japan and unleashing of growth forces with the preservation of ”fair”
New Zealand can also be counted among them. Only distribution. It was primarily the “wild” 2000s of unbridled
Chile stands out in this respect; at over 80%, the wealth growth, in which the private sector was still subject to hardly
share of the top decile is one of the highest in the world. any restrictions, that caused inequality to rise.

Wealth concentration has improved in 16 countries,

i.e. the share of the richest decile has fallen. Naturally,
the declines are particularly sharp in countries such
as Türkiye and Colombia, where wealth concentration
was originally very high; however, at 64.6% (Colombia)
and 68.0% (Türkiye), they are still well above the global
average.
Figure 34: Wide range
Share of top10 in total net financial assets, change in pps

18

15

12

-3

-6

-9
Türkiye

Italy

Australia
Norway
Poland

France
Slovakia

Slovenia

Kazakhstan
Malaysia

Denmark

Russia
India
Austria

South Africa

Germany

Bulgaria

China
Serbia

Malta
Taiwan
Netherlands

Thailand

Canada

South Korea
New Zealand

Croatia
Sri Lanka

United Kingdom
Sweden

Czech Republic

Singapore
Belgium

Romania
Peru

Switzerland
Vietnam
Portugal

Mexico
Brazil
Colombia

Latvia

Ireland

Cambodia

Japan
Argentina

Hungary

Philippines

Estonia

Finland
Pakistan
Greece

Chile

Lithuania

Indonesia
Spain

United States

Sources: Eurostat, ECB, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, World Ine-
quality Database, Allianz Research.

36
 24 September 2024

The distribution situation is somewhat “friendlier” if the The interesting group, however, is the third, in which
middle or the numerical size of the three large wealth the middle class has shrunk in terms of numbers. This
classes low, middle and high is taken into consideration. is particularly the case in some Asian countries, where
The respective national average of net financial assets is the decline has been very sharp in some cases. The
the benchmark for the classification. reason for this is the rapid growth in wealth over the
last two decades. Twenty years ago, there was hardly
Table 2 provides an overview of how the middle class any private wealth in countries such as Cambodia,
has changed in terms of the number of its members in Indonesia or Vietnam; this also applies to India and
the individual countries. What is immediately apparent is China, at least with regard to the vast majority of the
that the middle class has remained stable in this regard population: everyone was “middle class”, but the middle
in the vast majority of countries. This group includes most was poor. It was only with the accumulation of wealth
European countries (both East and West). The rich are that greater differences in wealth ownership emerged.
getting richer, but this is not accompanied by a crumbling The rapid growth in wealth went hand in hand with the
of the middle; there is no evidence of a social decline first differentiation of the population into different wealth
of broad sections of the population in the wealth data classes. Of course, this does not apply to the UK and the
of recent years. On the contrary, there are even a few USA, where the middle class has also shrunk (albeit not
countries – again mainly in Europe – where the number as much), an indication of the still unresolved distribution
of members of the middle class has risen in the last 20 problem in these countries, although at least the last ten
years. Norway is the only country where this growth has years have been characterized by a certain stability.
come from the high wealth class. In all other countries, on
the other hand, the growth is attributable to the rise of
members from the low wealth class.

Table 2: Stability in the middle I

Stable middle class Growing middle class Shrinking middle class

Australia Argentina Brazil

Austria Colombia Cambodia
Belgium Ireland China
Bulgaria Latvia India
Canada Netherlands Indonesia
Chile Norway Vietnam
Croatia Portugal Kazakhstan
Czech Republic Romania Lithuania
Denmark Slovakia Pakistan
Estonia Russia
Finland Serbia
France Sri Lanka
Germany Türkiye
Greece United Kingdom
Hungary United States
Italy
Japan
Malaysia
Malta
Mexico
New Zealand
Peru
Philippines
Poland
Singapore
Slovenia
South Africa
South Korea
Spain
Sweden
Switzerland
Taiwan
Thailand

Source: Allianz Research.

37
Allianz Research

The finding of the relative stability of wealth distribution On the one side (deterioration) are India, Switzerland,
across the board is also supported by the ratio of the China and Brazil, countries in which wealth concentration
mean to the median – a common measure of distribution. has risen rather sharply; on the other side (improvement)
This value has hardly changed over the last two decades; are Türkiye and Colombia, among others. For the majority
it has even fallen minimally from 3.2 (2003) to 3.1 (2023) of countries, however, this value is relatively stable, which
(unweighted average of the countries under review in indicates that the median and mean have grown more
each case), i.e. the gap between the mean and median or less synchronously. This underlines once again that
has become slightly smaller in relative terms. But of the increased concentration of wealth observed in many
course this does not apply to all countries (Figure 35). countries is not due to the middle falling behind, but rather
In fact, there are only very few countries in which this to an extraordinary increase in the wealth of a few at the
ratio has changed significantly (by more than 0.5 pps). top of the distribution pyramid.

Figure 35: Stability in the middle II

Ratio between mean and median net financial assets, change in points
3

-1

-2

-3
Türkiye

Italy

Australia
Poland

France

Norway
Slovakia

Slovenia

Kazakhstan
Malaysia

Denmark

India

Russia
South Africa

Austria

Bulgaria

Germany

China
Serbia

Malta

Taiwan
Thailand

Netherlands

Canada

South Korea
New Zealand

Croatia
Sri Lanka

Sweden

Czech Republic

United Kingdom
Singapore
Belgium

Romania
Peru

Switzerland
Portugal

Mexico
Ireland

Brazil
Colombia

Latvia

Cambodia

Japan
Argentina

Philippines

Hungary

Pakistan
Estonia
Finland
Greece

Lithuania
Chile

Indonesia
Spain

United States

Sources: Eurostat, ECB, national central banks, financial supervisory authorities, financial associations and statistical offices, IMF, LSEG, World Ine-
quality Database, Allianz Research.

38
 24 September 2024

Appendices
Appendix A: Methodological comments

General assumptions
The Allianz Global Wealth Report analyses gross financial assets held by households, i.e., cash and bank deposits,
receivables from insurance companies and pension institutions, securities (shares, bonds and investment funds) and
other receivables, and liabilities incurred by households. It is based on data from 57 countries. This group of countries
covers 91% of global GDP and 72% of the global population. In 42 countries, we had access to statistics from the
macroeconomic financial accounts. In the other countries, we were able to estimate the volume of total financial assets
based on information from household surveys, bank statistics, statistics on assets held in equities and bonds and
technical reserves.
In order to rule out exchange rate distortions over time, the financial assets were converted into the national currency
based on the exchange rate at the end of 2023. The closing date for data to be included in the report is 31 July.

Statistical distinctions
The process associated with the introduction of the European System of Accounts 2010 (ESA 2010) in September 2014
involved updating and harmonizing the guidelines governing the preparation of many macroeconomic statistics. The
new requirements also apply to the macroeconomic financial accounts. One change relates to private households:
under the ESVG 2010 regulations, the two sectors „Private households“ and „Private organizations without pecuniary
reward“ are no longer grouped, but now reported separately. This also has implications for the Allianz Global Wealth
Report, which takes data from the macroeconomic financial accounts as a basis where available. For many countries,
however – particularly those outside of the EU – there is no separate data available for these sectors in general. So
in order to ensure global comparability, this publication analyzes both sectors together under the heading „private
households“.

Determination of wealth bands for global wealth classes

Lower wealth threshold: There is a close link between financial assets and the incomes of private households.
According to Davies et al. (2009)12, private individuals with below-average income tend to have no assets at all, or
only very few. It is only when individuals move into middle and higher income groups that they start to accumulate any
assets to speak of.
We have applied this link to our analysis. Countries in the upper-middle income bracket (based on the World Bank‘s
country classification system) therefore form the group in which the average assets of private households has reached
a relevant volume for the first time. This value marks the lower threshold for the global middle wealth class. How high
should this value be?
In terms of income, households with incomes that correspond to between 75% and 150% of average net income are
generally considered to constitute the middle class. According to Davies et al., households with income corresponding
to 75% of the average income have assets that correspond to 30% of the average assets. As far as the upper threshold
is concerned, 150% of average income corresponds to 180% of average assets. Consequently, we have set the threshold
values for the wealth middle class at 30% and 180% of average per capital assets. If we use net financial assets to
calculate the two thresholds, we arrive at an asset range of between EUR9,700 and EUR57,900 for the global middle
wealth class in 2023.
Individuals with higher per capita financial assets then belong to the global high wealth class, whereas those with
lower per capita financial assets belong to the low wealth class.

12 Davies, James B. et al. (2009), The level and distribution of global household wealth, NBER working paper 15508.

39
Allianz Research

Appendix B1: Gross financial assets and liabilities by country, 2023

Gross financial assets Liabilities

in EUR bn yoy in % EUR per capita as % of GDP in EUR bn yoy in % EUR per capita as % of GDP

Argentina 52 181.8 1,160 24.3 10 125.3 210 4.4

Australia 4,464 8.4 171,980 275.8 1,881 4.8 72,480 116.3
Austria 850 3.4 94,790 176.9 219 -1.6 24,380 45.5
Belgium 1,557 4.9 134,550 267.2 353 2.7 30,510 60.6
Brazil 2,572 7.8 12,270 127.1 741 10.6 3,540 36.6
Bulgaria 139 5.8 20,280 148.5 27 13.6 3,870 28.4
Cambodia 38 28.2 2,250 96.7 13 0.4 740 31.9
Canada 6,808 6.3 177,050 343.3 2,074 3.3 53,920 104.6
Chile 493 6.8 25,360 168.9 143 6.3 7,330 48.8
China 33,714 8.2 23,640 211.1 10,224 6.9 7,170 64.0
Colombia 358 0.3 7,000 97.5 122 6.6 2,380 33.1
Croatia 89 7.4 22,680 117.3 25 9.5 6,260 32.4
Czech Republic 443 14.7 42,030 148.3 107 0.9 10,120 35.7
Denmark 1,353 4.0 231,060 361.4 345 3.1 58,860 92.1
Estonia 50 3.6 37,460 132.4 16 5.3 11,760 41.6
Finland 418 3.6 75,420 150.4 212 0.7 38,330 76.4
France 6,835 5.9 103,430 243.8 2,052 1.1 31,050 73.2
Germany 7,953 6.8 95,030 193.0 2,173 0.9 25,970 52.7
Greece 331 7.4 31,300 150.3 107 -1.6 10,160 48.8
Hungary 262 15.0 26,990 133.4 40 3.6 4,130 20.4
India 4,119 12.7 2,910 128.0 1,511 28.5 1,070 47.0
Indonesia 457 4.4 1,650 37.2 197 9.0 710 16.0
Ireland 527 5.5 104,710 104.3 152 6.4 30,260 30.2
Italy 5,629 6.0 94,240 269.9 1,034 0.2 17,310 49.6
Japan 14,220 5.4 113,150 374.2 2,666 1.7 21,210 70.1
Kazakhstan 87 20.9 4,390 36.6 45 26.7 2,260 18.8
Latvia 41 9.2 21,910 102.5 8 4.6 4,290 20.1
Lithuania 76 8.6 27,080 105.0 17 3.7 5,940 23.0
Malaysia 626 5.8 18,250 167.6 302 5.7 8,820 80.9
Malta 43 5.7 81,140 219.5 12 7.2 22,410 60.6
Mexico 1,698 12.2 13,300 100.0 327 9.6 2,560 19.3
Netherlands 3,139 6.8 177,040 303.9 1,060 1.4 59,760 102.6
New Zealand 821 -0.3 160,700 353.3 170 3.7 33,270 73.2
Norway 630 7.2 116,510 137.8 422 3.6 77,980 92.2
Pakistan 132 16.1 550 48.7 9 2.2 40 3.5
Peru 106 6.8 3,210 43.4 41 7.1 1,250 16.9
Philippines 327 13.2 2,890 82.4 108 12.9 950 27.1
Poland 706 7.4 18,550 90.3 190 -0.8 4,990 24.3
Portugal 508 3.8 48,890 191.2 181 -0.3 17,430 68.2
Romania 239 8.2 12,400 75.0 57 3.2 2,960 17.9
Russia 1,547 22.6 10,610 89.3 402 22.5 2,760 23.2
Serbia 25 13.0 3,730 36.6 13 1.1 1,840 18.1
Singapore 1,204 5.8 216,990 260.5 250 1.0 45,060 54.1
Slovakia 107 4.0 19,720 87.9 57 6.6 10,560 47.0
Slovenia 79 6.8 37,210 124.6 17 4.7 8,240 27.6
South Africa 742 8.3 12,060 215.0 141 5.6 2,300 40.9
South Korea 3,658 4.7 70,550 232.7 1,629 -0.7 31,410 103.6
Spain 2,830 5.8 59,290 193.6 744 -2.4 15,590 50.9
Sri Lanka 46 10.7 2,030 59.7 7 -2.1 300 8.7
Sweden 1,801 7.7 172,910 318.5 492 0.6 47,250 87.0
Switzerland 3,334 2.2 382,910 389.7 1,110 1.8 127,470 129.7
Taiwan 4,154 9.3 176,340 597.5 650 6.3 27,590 93.5
Thailand 745 -1.9 10,390 156.8 434 3.0 6,050 91.3
Türkiye 381 68.7 4,390 47.3 99 76.5 1,150 12.4
United Kingdom 8,009 1.5 118,360 258.0 2,588 1.7 38,250 83.4
United States 107,127 8.6 314,930 432.6 18,576 2.9 54,610 75.0
Vietnam 366 10.8 3,700 95.9 203 13.8 2,050 53.1

40
 24 September 2024

Appendix B2: Net financial assets by country, 2023

Gini coefficient of
Net financial assets GDP
wealth distribution
in EUR bn yoy in % EUR per capita (2022) in % EUR per capita

Argentina 43 198.5 940 74.0 4,730

Australia 2,582 11.1 99,490 72.9 61,190
Austria 631 5.2 70,410 77.1 52,630
Belgium 1,204 5.5 104,040 67.4 49,740
Brazil 1,831 6.8 8,740 90.3 9,580
Bulgaria 113 4.1 16,410 74.1 13,820
Cambodia 26 48.4 1,510 74.4 2,270
Canada 4,735 7.8 123,130 73.7 50,470
Chile 351 7.0 18,030 91.0 14,860
China 23,490 8.7 16,470 76.5 11,230
Colombia 237 -2.6 4,630 77.7 7,020
Croatia 64 6.7 16,410 74.9 19,470
Czech Republic 336 20.0 31,910 73.8 27,620
Denmark 1,009 4.3 172,200 70.6 62,960
Estonia 34 2.8 25,690 83.0 27,560
Finland 206 6.7 37,090 75.2 49,600
France 4,783 8.2 72,380 72.1 42,190
Germany 5,780 9.2 69,060 74.0 48,740
Greece 224 12.4 21,140 85.1 21,510
Hungary 222 17.3 22,860 79.1 20,270
India 2,607 5.2 1,840 75.3 2,240
Indonesia 260 1.1 940 75.5 4,370
Ireland 374 5.2 74,450 87.6 97,110
Italy 4,595 7.4 76,930 75.3 35,050
Japan 11,555 6.2 91,940 73.9 30,560
Kazakhstan 42 15.3 2,130 75.1 11,650
Latvia 33 10.4 17,620 73.3 21,410
Lithuania 59 10.1 21,140 76.5 25,240
Malaysia 323 5.8 9,430 75.7 10,630
Malta 31 5.2 58,730 65.5 36,370
Mexico 1,371 12.8 10,740 89.8 13,090
Netherlands 2,079 9.8 117,270 61.3 57,090
New Zealand 651 -1.3 127,430 72.6 44,910
Norway 208 15.2 38,530 72.5 82,830
Pakistan 122 17.4 510 74.6 1,090
Peru 65 6.6 1,960 88.0 7,240
Philippines 220 13.3 1,940 77.0 3,460
Poland 516 10.8 13,570 84.9 20,170
Portugal 327 6.2 31,460 76.0 25,480
Romania 182 9.9 9,440 73.3 16,640
Russia 1,145 22.6 7,850 82.8 11,910
Serbia 13 27.5 1,890 72.7 10,260
Singapore 954 7.1 171,930 76.5 79,820
Slovakia 50 1.2 9,160 68.1 22,140
Slovenia 61 7.4 28,970 72.9 29,780
South Africa 601 8.9 9,770 93.6 5,460
South Korea 2,029 9.4 39,140 74.3 30,380
Spain 2,086 9.1 43,690 70.4 30,510
Sri Lanka 39 13.3 1,730 77.8 3,360
Sweden 1,309 10.6 125,660 74.0 53,590
Switzerland 2,224 2.5 255,440 76.5 96,430
Taiwan 3,504 9.9 148,750 73.4 29,820
Thailand 311 -7.9 4,340 86.3 6,630
Türkiye 281 66.2 3,240 80.2 9,230
United Kingdom 5,421 1.4 80,110 72.7 45,200
United States 88,552 9.8 260,320 82.7 72,100
Vietnam 163 7.4 1,650 74.5 3,800

41
Allianz Research

Appendix C: Global ranking 2023

… by net financial assets per capita, in EUR … by gross financial assets per capita, in EUR

1 United States 260,320 1 Switzerland 382,910

2 Switzerland 255,440 2 United States 314,930
3 Denmark 172,200 3 Denmark 231,060
4 Singapore 171,930 4 Singapore 216,990
5 Taiwan 148,750 5 Canada 177,050
6 New Zealand 127,430 6 Netherlands 177,040
7 Sweden 125,660 7 Taiwan 176,340
8 Canada 123,130 8 Sweden 172,910
9 Netherlands 117,270 9 Australia 171,980
10 Belgium 104,040 10 New Zealand 160,700
11 Australia 99,490 11 Belgium 134,550
12 Japan 91,940 12 United Kingdom 118,360
13 United Kingdom 80,110 13 Norway 116,510
14 Italy 76,930 14 Japan 113,150
15 Ireland 74,450 15 Ireland 104,710
16 France 72,380 16 France 103,430
17 Austria 70,410 17 Germany 95,030
18 Germany 69,060 18 Austria 94,790
19 Malta 58,730 19 Italy 94,240
20 Spain 43,690 20 Malta 81,140
21 South Korea 39,140 21 Finland 75,420
22 Norway 38,530 22 South Korea 70,550
23 Finland 37,090 23 Spain 59,290
24 Czech Republic 31,910 24 Portugal 48,890
25 Portugal 31,460 25 Czech Republic 42,030
26 Slovenia 28,970 26 Estonia 37,460
27 Estonia 25,690 27 Slovenia 37,210
28 Hungary 22,860 28 Greece 31,300
29 Greece 21,140 29 Lithuania 27,080
30 Lithuania 21,140 30 Hungary 26,990
31 Chile 18,030 31 Chile 25,360
32 Latvia 17,620 32 China 23,640
33 China 16,470 33 Croatia 22,680
34 Croatia 16,410 34 Latvia 21,910
35 Bulgaria 16,410 35 Bulgaria 20,280
36 Poland 13,570 36 Slovakia 19,720
37 Mexico 10,740 37 Poland 18,550
38 South Africa 9,770 38 Malaysia 18,250
39 Romania 9,440 39 Mexico 13,300
40 Malaysia 9,430 40 Romania 12,400
41 Slovakia 9,160 41 Brazil 12,270
42 Brazil 8,740 42 South Africa 12,060
43 Russia 7,850 43 Russia 10,610
44 Colombia 4,630 44 Thailand 10,390
45 Thailand 4,340 45 Colombia 7,000
46 Türkiye 3,240 46 Türkiye 4,390
47 Kazakhstan 2,130 47 Kazakhstan 4,390
48 Peru 1,960 48 Serbia 3,730
49 Philippines 1,940 49 Vietnam 3,700
50 Serbia 1,890 50 Peru 3,210
51 India 1,840 51 India 2,910
52 Sri Lanka 1,730 52 Philippines 2,890
53 Vietnam 1,650 53 Cambodia 2,250
54 Cambodia 1,510 54 Sri Lanka 2,030
55 Argentina 940 55 Indonesia 1,650
56 Indonesia 940 56 Argentina 1,160
57 Pakistan 510 57 Pakistan 550

42
ALLIANZ RESEARCH 24 September 2024

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43
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Allianz Research Head of Economic Research Head of Insurance, Wealth & ESG Research
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