Allianz Global Wealth Report 2021: Saving from home

08 October 2021

Allianz Global Wealth Report 2021: Saving from home

Saved from the crisis: Global financial assets increased by 9.7% in 2020, reaching the magic EUR 200 trillion mark for the first time
Vaccinated: 2021 should turn out to be another good year for savers, with overall growth in financial assets globally of around 7%
Australia: Savings are sky high with bank deposits increasing at the fastest rate since GFC; financial assets rose by 5.2% in 2020; Australia ranks 13th place in 20 richest countries
Long Covid: The crisis is likely to entrench wealth inequality, between as well as within countries

Today, Allianz unveiled the twelfth edition of its “Global Wealth Report”, which puts the asset and debt situation of households in almost 60 countries under the microscope.

Saved from the crisis

2020 was the year of extreme contrasts. Covid-19 destroyed millions of lives and livelihoods and the world economy plunged into its deepest recession since World War II. At the same time, monetary and fiscal policy mobilized unimagined sums to support the economy, markets and people. With success: Incomes were stabilised and stock markets recovered quickly. With this tailwind, household wealth weathered the Covid-19 crisis: Global gross financial assets^{^[1]} increased by 9.7% in 2020, reaching the magic EUR 200 trillion mark for the first time.

Savings were the main driver: As lockdowns drastically reduced consumption opportunities, the global phenomenon of "forced savings" was born. Fresh savings jumped by 78% to EUR 5.2 trillion in 2020, an absolute record. Inflows into bank deposits – the default option of forced savings, simply leaving unspent income in the bank account – almost tripled (+187%). Bank deposits accounted for half or more of fresh savings in all markets considered. As a result, for the first time, bank deposits worldwide grew at a double-digit rate of 11.9%; the previous peak growth was 8% in the financial crisis year 2008. While the asset class securities – buoyed by the strong stock markets – grew by 10.9%, insurance and pension fund assets showed much weaker development, rising by 6.3%.

Vaccinated

Despite a subdued start, despite continued bottlenecks in world trade, and despite new virus variants forcing new restrictions, global GDP will grow strongly in 2021, powered by the vaccination campaign which allows economies to reopen and (partially) return to normality. Moreover, loose monetary policies and generous fiscal support remain in place. The upshot for savers around the world? Bar any major stock market corrections, 2021 should turn out to be another good year for them, with overall growth in financial assets globally of around 7%.

“The head numbers are very impressive”, said Ludovic Subran, chief economist of Allianz. “But we should dig a little deeper. Most households did not really save but simply put their money aside. All this idle money on bank accounts is a wasted opportunity. Instead, households should invest in their retirement and the green transition, enabling societies to master the paramount challenges we face, climate and demographic change. My fear is that if households start eventually to dishoard, money will end up in revenge consumption and will only fuel inflation. We urgently need a new ‘savings culture’.”

Australia: Another bumper year

Gross financial assets of Australian households rose by 5.2% in 2020 (2019: 12.8%), well in line with the region’s average (Oceania: 5.0%). Main drivers were bank deposits which increased by a whopping 12.4%, the fastest increase since the Global Financial Crisis (2008: 19.3%), fueled by record inflows of EUR 18.5 billion, over twice the level seen in 2019. Almost one half of fresh savings for Australian households in 2020 ended up in bank accounts, against a portfolio share of just 22%. Insurance and pension funds asset grew by a modest 3.1%.

Liabilities, grew slightly by 2.0%. Although this is the slowest growth since the beginning of our records, it is miles away from the double-digit leap of the years preceding the GFC. The debt ratio (liabilities as% of GDP) jumped to 129.3%, not as a consequence of the debt growth, but because GDP contracted in 2020. This ratio is well above the average of Advance Economies (82.6%). Net financial assets increased by 7.5% (2019: 21.6%). With net financial assets per capita of 88,740 euros, Australia remained in 13th place in the ranking of the 20 richest countries (financial assets per capita, see table). For 2021, a similar dynamic development can be expected, mainly thanks to a buoyant stock market and generous social transfer in the first half. In the first six months, financial assets of Australian households already rose by around 5.2%.

Long Covid

In 2020, financial assets in emerging markets (+13.9%) grew again faster than in advanced markets (+10.4%), returning to familiar patterns of growth after three years. As a result, the prosperity gap between rich and poor countries has also narrowed somewhat. The trend reversal that we diagnosed last year – the renewed drifting apart of the poorer and richer countries – thus appears to have been halted for the time being. However, it is (much) too early to sound the all-clear. While many developing countries performed surprisingly well in the first year of the pandemic, there are indications that the long-term consequences and challenges – from insufficient vaccination and reconfigured supply chains to the digital and green transformation – could primarily affect the poorer countries.

The same can be said with regard to national wealth distribution. While the national middle class has shrunk in recent years as their share of total national wealth has declined in many countries, for 2020 at least, the immense social transfers seem to have successfully counteracted a further drifting apart of the wealth classes. But this happy affair may not last when state support expires and the direct effects of the crisis – the loss of millions of jobs – will once again be felt. Moreover, the crisis led to a significant impairment in school education. Covid-19 is thus likely to further entrench social immobility. The gradual disappearance of the middle class has only temporarily stopped.

“The pandemic is a much bigger challenge for poorer countries”, commented Patricia Pelayo Romero, co-author of the report. “Very likely, Covid-19 will continue to hold back economic development in this group of countries for much longer than in the advanced markets. But the real challenge comes afterwards: These countries will find themselves in a post-pandemic world that will make it increasingly difficult for them to play out their comparative advantages in a proven way, given the lasting changes in technologies, politics, and life styles. The gradual closing of the global prosperity gap – the defining development over the last decades – can no longer taken for granted.”

-ENDS-

Media contact (Australia):
Michaela Wray, Allianz Retire+
P: 0466 455 430 E: michaela.wray@allianzretireplus.com.au

Notes for editors:

Top 20 in 2020 by…

…Net financial assets per capita				…Gross financial assets per capita
	in EUR	y/y in %	Rank in 2000		in EUR	y/y in %	Rank in 2000
#1 USA	218,470	12.9	2	#1 Switzerland	313,260	3.1	1
#2 Switzerland	212,050	3.7	1	#2 USA	260,580	11.2	2
#3 Denmark	149,240	14.6	12	#3 Denmark	212,570	10.4	6
#4 Netherlands	128,560	12.5	7	#4 Netherlands	180,190	9.3	4
#5 Sweden	124,760	8.8	14	#5 Sweden	173,130	7.8	15
#6 Singapore	118,930	10.9	17	#6 Singapore	152,590	7.6	11
#7 Taiwan	117,660	11.2	13	#7 Australia	151,690	3.9	18
#8 New Zealand	114,170	3.0	8	#8 New Zealand	144,660	3.4	10
#9 Japan	100,470	2.8	3	#9 Taiwan	139,830	10.5	16
#10 Belgium	98,930	3.7	4	#10 Canada	139,410	6.1	9
#11 Canada	96,430	7.5	9	#11 Belgium	126,460	3.6	5
#12 Great Britain	90,020	9.7	5	#12 Japan	124,900	2.7	3
#13 Australia	88,740	6.2	18	#13 Great Britain	123,580	7.7	7
#14 Israel	87,460	4.5	10	#14 Israel	109,670	4.3	14
#15 France	66,560	5.7	11	#15 Norway	100,330	5.8	20
#16 Austria	63,590	5.5	16	#16 France	94,990	5.5	12
#17 Italy	62,780	2.8	6	#17 Ireland	89,300	5.8	13
#18 Germany	61,760	7.2	19	#18 Austria	86,500	4.7	19
#19 Ireland	60,360	10.8	15	#19 Germany	85,370	6.3	17
#20 South Korea	36,470	18.1	26	#20 Italy	78,880	2.4	8

#39 South Africa	6,400	3.9	38	#41 South Africa	8,630	3.6	37

Munich, October 7, 2021

You can find the study here on our homepage

About Allianz

The Allianz Group is one of the world's leading insurers and asset managers with more than 100 million[1] private and corporate customers in more than 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 790 billion euros on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage 1.7 trillion euros of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are amongst the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2020, over 150,000 employees achieved total revenues of 140 billion euros and an operating profit of 10.8 billion euros for the group.

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This material is issued by Allianz Australia Life Insurance Limited, ABN 27 076 033 782, AFSL 296559. (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. This information is current as at September 2021 unless otherwise specified and is for general information purposes only. It is not comprehensive or intended to give financial product advice. Any advice provided in this material does not take into account your objectives, financial situation or needs. Before acting on anything contained in this material, you should speak to your financial adviser and consider the appropriateness of the information received, having regard to your objectives, financial situation and needs. No person should rely on the content of this material or act on the basis of anything stated in this material. Allianz Retire+ and its related entities, agents or employees do not accept any liability for any loss arising whether directly or indirectly from any use of this material. Past performance is not a reliable indicator of future performance. PIMCO provides investment management and other support services to Allianz Retire+ but is not responsible for the performance of any Allianz Retire+ product, or any other product or service promoted or supplied by Allianz. Use of the POWERED BY PIMCO trade mark, or any other use of the PIMCO name, is not a recommendation of any particular security, strategy or investment product.

¹ Financial assets include cash and bank deposits, receivables form insurance companies and pension institutions, securities (shares, bonds and investment funds) and other receivables.

² Including non-consolidated entities with Allianz customers.