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The global economic turmoil in 2020 From Credit Suisse

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The following is the The global economic turmoil in 2020 From Credit Suisse recommended by recordtrend.com. And this article belongs to the classification: global economy .

2019 is a remarkable year for wealth creation, with global wealth increasing by US $36.3 trillion. However, the new crown epidemic has reduced the global household wealth by $17.5 trillion from January to March 2020. After March, the stock market rebounded and house prices rose. Forecasts for the second quarter of 2020 show that global household wealth is slightly higher than at the end of last year, but the per capita wealth of adults is slightly lower.

Without the outbreak, the best prediction is that the per capita wealth of global adults will rise from $77309 at the beginning of 2020 to $78376 at the end of June. In fact, the epidemic reduced the average wealth to $76984.

China, the first to bear the brunt, has taken effective measures to fight the epidemic, and the economy has recovered healthily. Although the negative economic impact cannot be ignored, we expect that per capita wealth will still grow by 4.1% in the first half of 2020. It is expected that China’s wealth accumulation will continue to maintain a relatively strong growth trend in the rest of 2020 and 2021.

Direct impact of epidemic situation

The initial impact of the epidemic was reflected in asset prices, with global household net worth falling by $17.5 trillion, or 4.4%, between January and March 2020. Subsequently, governments and central banks around the world have taken measures to reverse the situation this autumn. By June this year, global wealth was $1 trillion higher than the starting value. However, falling GDP and rising debt will cause long-term damage, so wealth growth may be curbed in the next few years or even longer.

Credit Suisse’s Global Wealth Report 2020 predicts that global household wealth in the middle of this year will be $1 trillion higher than in January, an increase of 0.25%. This is lower than the growth in the number of adults over the same period, so the global average wealth shrank by 0.4% to $76984. Compared with the global per capita wealth of 1392.0 trillion US dollars before the outbreak of the global epidemic, the per capita wealth of adults decreased by 1.392 trillion US dollars.

Latin America has been the hardest hit, with currency devaluation exacerbating the decline in gross domestic product, resulting in a 12.8% reduction in total dollar wealth. The outbreak has curbed the expected growth in North America, with losses to all countries and regions except China and India. Among the world’s major economies, Britain’s wealth has shrunk the most.

One of the big changes this year has been the rise in the savings rate, mainly due to global isolation measures and other epidemic related spending restrictions, combined with rent and mortgage deferral, which magnified the decline in consumption in the second quarter of 2020. However, the overall wealth impact is likely to be modest, as spending constraints are not expected to last too long.

Distribution of wealth

Compared with the huge loss of GDP caused by the epidemic, the impact on the distribution of wealth in countries around the world has been negligible. In fact, there is no conclusive evidence that the high wealth group as a whole is less affected by the epidemic than the low wealth group, and vice versa. Although it is too early to fully assess the impact of the epidemic on global wealth distribution, the latest data suggest that, in at least one major country, the United States, the overall uneven distribution of wealth appears to have eased.

Global inequality also depends on differences between countries, and a comprehensive assessment of this requires more data. The impact on specific groups is relatively obvious: low skilled people, women, ethnic minorities, young people and small and medium-sized enterprises have been affected to varying degrees, while areas related to minority industries that flourished during the epidemic, such as the technology industry, have benefited greatly.

Women, millennials and minorities

Women in the workplace are particularly affected, in part because of the high proportion of women in catering, accommodation, personal services, retail and other industries and enterprises seriously affected by the epidemic.

Similarly, for millennials with a large age span of 20-40 years, the oldest group may not be hit more than the whole group, while the younger group, especially women and the less educated, may be worse off. Part of the millennials’ weakness is the result of the 2007-08 financial crisis, which caused massive unemployment. The epidemic may not only be a “double whammy” for millennials, but also a generation after the epidemic will suffer the same because of reduced economic activity, retrogression of globalization and travel restrictions.

During the epidemic period, the health and economic impact of ethnic minorities was significantly higher than the average level. In the United States, for example, the rate of confirmed infection and hospitalization among major ethnic minorities is much higher than that of whites. Because the unemployment rate is also higher than that of whites, this group suffers more.

Impact on millionaires and ultra high net worth individuals

In 2019, the number of millionaires in the world will soar to 51.9 million, and there will be little change in the first half of 2020. At the top of the wealth pyramid, this report estimates that at the beginning of this year, the total number of ultra-high net worth (uhnw) adults with a net worth of more than US $50 million was 175690. In 2019, the total number of ultra-high net worth adults increased by 16760 (an increase of 11%), compared with the loss of 120 in the first half of 2020; since the beginning of 2019, the number of ultra-high net worth adults has increased by 16640.

Professor Anthony Shorrocks, an economist and author of the report, said: “in the context of the impact of the new epidemic on the global economy, the relative safety of family wealth seems to be commendable. Wealth is a way for families to protect themselves in difficult times. At first, the impact of the epidemic was mainly reflected in the global stock market crash. When it became clear that governments and central banks made successive commitments, stock prices began to rise. In some countries and regions, including the United States, the initial stock market decline has been reversed as a whole, although stock prices in many countries have not yet fully recovered. In the non-financial sector, global housing or real estate prices have not shown a general downward trend. “

“Although the wealth creation in 2019 is remarkable, the new crown epidemic has made everyone aware of the risk of external shocks to the global economy. Unlike the financial crisis of 2007-08, we have reason to be optimistic in this catastrophe, because the global financial industry is much healthier than it was in the previous crisis. Governments and central banks have also recognized the important role of credit arrangements and quantitative easing during severe crises. “

——Nannette hechler fayd’herbe, chief investment officer and head of global economics and research, Credit Suisse International

“So far, the impact of the epidemic on household wealth has been minimal,” hechler fayd’herbe said. However, a slowdown in economic growth, coupled with changes in corporate and consumer behavior, may result in loss of output, redundancy in facilities and changes in industry structure, which may inhibit the accumulation of household wealth for a period of time. The impact on the global economy leads us to believe that through 2021, the growth of household wealth can only recover slowly from the epidemic. The internal situation of various countries is changing rapidly, and many accidents are bound to occur one after another. Among the major economies, China is likely to be the obvious winner. ” Read more: Credit Suisse: emerging market consumer survey 2015 Credit Suisse: it is estimated that 64% of the world’s wealth will be concentrated in the hands of 1% by 2030. Credit Suisse: in 2015, China will surpass Japan to become the second richest country in the world. Pew Research Center: in 2013, the median wealth of white families in the United States was 13 times that of black families. China household wealth survey Economic Daily: China’s household wealth survey in 2015 Report wealthx: household wealth transfer report in 2019 Credit Suisse: Global Wealth Report in 2020 Credit Suisse: China’s R & D spending will surpass that of the United States in 2020 China’s online lending industry: Transformation of retail financing mode (download attached) Credit Suisse & young investors organization: creating the world with the next generation Credit Suisse: expected penetration of electric vehicles to 57% by 2030 Credit Suisse: Tencent mobile travel in the third quarter of 2015 Credit Suisse: in 2014, the proportion of investment banks’ financing expenses from Chinese private enterprises exceeded that of state-owned enterprises. Credit Suisse raised the target price of cheetah mobile stock to $23

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