Gains in global personal wealth slowed to the weakest in five years in 2018, according to a new analysis released on Thursday. Things were worse in Canada.
Anna Zakrzewski, global leader of Boston Consulting Group’s wealth-management practice, said wealth growth turned negative last year in Canada for the first time.
“Canada was actually negative one per cent,” she told Yahoo Finance Canada.
BCG found global wealth growth came to a sharp halt in 2018, rising just 1.6 per cent. The slowdown comes on the heels of a 7.5 per cent gain in personal global wealth in 2017, and a 6.2 per cent compound annual growth rate from 2013 to 2017.
When the impact of the rising U.S. dollar is factored in, that 1.6 per cent gain last year was effectively wiped out.
“For the first time since 2008, we saw wealth growth was negative when you take into account all the factors. North America as a whole was kind of a zero-sum game,” Zakrzewski said.
BCG blamed the fourth-quarter dip on major stock indexes for pulling down equities and the large portfolios tied to them. High valuation levels, geopolitical risks, and the challenges of returning to normal interest rate levels also contributed to the decline, the researchers found.
Zakrzewski said the North American preference for equities over fixed-income investments contributed to weaker wealth growth in the region. Canadians, she added, tend to keep a more conservative portfolio than their neighbours to the south.
“North America on average had 14 per cent in cash and deposits,” she said. “Canada was 22 per cent.”
BCG estimated the global pool of personal wealth is US$206 trillion.
The firm also took a snapshot of the world’s millionaires and found Switzerland has the most as a percentage of its adult population, followed by the U.S., Canada, Taiwan and Japan.
The global millionaire population was found to have jumped 2.1 per cent in 2018 to 22.1 million.