Globally HNWI wealth to touch $ 48.5 trn by 2013: Survey

With hopes of economic recovery gaining momentum, the wealth of high net-worth individuals across the world are likely to touch a whopping $48.5 trillion by the year 2013, a survey says.

According to the latest report by Capgemini and Merrill Lynch Global Wealth Management, "HNWI financial wealth will grow to $48.5 trillion by 2013, advancing at an annualised rate of 8.1 per cent driven by the recovery in asset prices as the global economy and financial system right themselves."

The North America and Asia-Pacific would lead the growth in HNWI financial wealth and "Asia-Pacific will actually surpass North America by 2013".

Growth in these regions will be driven by increased US consumer expenditure and the Chinese economy, which is already experiencing increased consumer demand.

The recovery in the HNWI wealth, which dropped nearly 20 per cent in 2008 to $32.8 trillion would however be slow.

"We expect some initial signs of growth in selected countries, which could pick up steam from 2010" but warned that protracted weakness in the global economic and financial systems could force a downward revision in forecast numbers.

The United States' role would be crucial for global economic recovery and experts believe the recession in US would end in the third or fourth quarter of 2009. Among other major growth drivers, China has shown increased signs of recovery, due to its domestic stimulus spending. Interestingly, after the technology bubble burst, during the recovery period (2002-2007), HNWI wealth grew at a robust annualised rate of close to 9 per cent.

"While the tech downturn and the most recent financial crisis are not identical forms of disruption, we nevertheless expect the recovery in HNWI wealth to be similarly robust this time around, as the business cycle starts to trend back up," the report added.

In the current environment, among emerging economies, Brazil and India are likely to support global growth rather than fuel it and Russia is expected to require a longer period of repair before it can regain its pre-crisis growth levels.

The report further highlighted that for economic recovery, credit availability is essential and a recovery of the global banking system is critical.

Under the current economic downturn, HNWIs preferred to stay away from equities and alternative investments and preferred to put their assets in "safer, simpler and more tangible investments".

In this regard the report said, "The 2008 flight-to-safety imperative is expected to ease, encouraging HNWIs to return to higher-risk/higher-return assets, and away from capital preservation instruments, as conditions improve."