Why was Brazil the country that lost the largest number of millionaires due to the epidemic

Why was Brazil the country that lost the largest number of millionaires due to the epidemic

Brazil was the country that lost the most millionaires in 2020 – 108 thousand, according to a recent report by Credit Suisse. Despite this, the gap between the rich and the poor has widened, with the richest 1% owning nearly half of the national wealth.

The study considers millionaires those with assets of more than one million US dollars (4.93 million Brazilian reals).

According to the report, entitled “Global Wealth Report 2021”, the decline in the number of Brazilian millionaires is mainly due to the depreciation of the real due to the COVID-19 pandemic. In 2020, the Brazilian real depreciated by more than 20% against the dollar.

This brings the number of millionaires in Brazil to 207 million in 2020, compared to 315,000 in 2019.

Other emerging economies such as India, Russia, Saudi Arabia, Chile and Mexico, among others, have also lost millionaires.

But this was an exception – in 2020, according to the report, the world acquired 5.2 million millionaires, a total of 56,084,000 people with assets of more than one million dollars. In 2019, that number was 50,873,000.

The country with the most contributors to this was the United States, with 1,730,000 millionaires, followed by Germany, Australia, Japan, France, the United Kingdom, China, Canada, the Netherlands, and Italy.

increasing inequality

The global increase in the number of new millionaires has been accompanied by a rise in income inequality.

This is what happened in Brazil, where the gulf between the rich and the poor has deepened.

Last year, Brazil ranked second out of the ten countries analyzed with the largest income inequality – the richest 1% now concentrate almost half of the national wealth (49.6%). In 2019, this percentage was 46.9%.

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Russia was the most uneven. There, the richest 1% own 58.2% of the national wealth.

Income inequality increased in eight of the ten countries analyzed (Brazil, China, India, Italy, Japan, Russia, the United Kingdom, and the United States).

France and Germany were the exceptions, both dropping 0.3 percentage points.

Credit Suisse reports that in the first half of 2020, stock exchanges recovered from the initial shock of the pandemic.

Photo: Getty Images

More millionaires

Two elements helped expand this individual wealth: the stock exchange recovery and the appreciation of real estate.

According to the researchers, wealth creation appears to be “completely separate” from the economic problems of the pandemic.

Anthony Shoroux, an economist and author of the Global Wealth Report study, said the pandemic had had a “severe short-term impact on global markets” but added that it was “largely reversed in late June 2020”.

In his analysis, he said, “global wealth not only remained stable in the face of such turmoil, but in fact increased rapidly in the second half of the year.”

According to Credit Suisse’s Shorrocks, if rising asset values ​​(such as rising property values) are taken out of the advanced wealth account, “the wealth of the family will decline globally.”

“In the lower tiers of wealth, where financial assets are less prevalent, wealth tends to be stable or in many cases regressive.”

He added, “Some fundamentals may balance out over time. For example, interest rates will start to rise again at some point, and this should weaken asset prices.”

Credit Suisse reports that total global wealth grew 7.4%.

Since the beginning of the twenty-first century, the number of people with wealth between $10,000 and $100,000 (from R$50,000 to R$500,000, in exchange values ​​23/6) has more than tripled in size, from 507 million in a year 2000 to 1.7 billion in mid-2020.

The financial institution said the increase reflected “the growing prosperity of emerging economies, especially China, and the expansion of the middle class in the developing world.”

“It is undeniable that the measures taken by governments and central banks to organize collective cash transfer programs to support the individuals and companies most affected by the pandemic, and the low interest rates have succeeded in averting a large-scale global crisis,” said Nanette Hechler. And it hits him, Chief Investment Officer at Credit Suisse.

“Generous payments from the public sector to households mean that disposable household income has been relatively stable and has even increased in some countries,” said Hechler Wieserbe of Credit Suisse.

But, in the Bank’s assessment, another policy had a greater impact on the progression of global wealth, without considering disparities in income groups.

Mundo won 5.2 million millionaires, totaling 56,084,000 people with assets of more than 1 million US dollars;  In 2019, that number was 50873000 - Getty Images - Getty Images

Mundo won 5.2 million millionaires, totaling 56,084,000 people with assets of more than 1 million US dollars; In 2019, this number was 50,873,000

Photo: Getty Images

“Perhaps the central bank’s cut in interest rates has had the biggest impact… It’s one of the main reasons for rising stock and real estate prices, and that translates directly into our assessments of family wealth.”

It added, however, that all of these interventions “had a significant cost” and that “public debt to GDP increased worldwide by 20 percentage points or more in many countries”.

future

According to Credito Suisse, the number of millionaires in the world should continue to increase. By 2025, it will reach 84 million, an increase of nearly 28 million from 2020, or 49.8%, the report predicts.

Expectations indicate that Brazil will gain 154 thousand millionaires in this period, from 207 thousand millionaires currently to 361,000, with a growth rate of 74.4%.

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About the Author: Camelia Kirk

"Friendly zombie guru. Avid pop culture scholar. Freelance travel geek. Wannabe troublemaker. Coffee specialist."

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