Executive summary

Against the backdrop of resilient economies and booming markets in the face of monetary tightening, global financial assets of private households recorded strong growth in 2023: With an increase of 7.6%, the losses of the previous year (-3.5%) were more than made up for. Overall, total financial assets amounted to EUR 239 trillion at the end of 2023. Growth in the three major asset classes was quite uneven. Securities (11.0%) and insurance/pensions (6.2%) benefited from the stock market boom and higher rates and grew significantly faster than the average of the last ten years. In contrast, growth in bank deposits fell to 4.6% after the pandemic-related boom years, recording one of the lowest increases in the last 20 years.

In 2023, the normalization of fresh savings continued after the pandemic-related boom years of forced savings: They fell by 19.3% to EUR 3.0 trillion. This decline was almost exclusively attributable to bank deposits. On balance, banks worldwide only received EUR 19bn, a slump of 97.7%. The main culprit: US households who liquidated deposits worth EUR 650bn. The other two asset classes, on the other hand, remained popular with savers. Inflows into securities even increased once again – from their record level of the previous year – by 10.0%. However, there was a notable change of favorites within this asset class: while shares were sold on balance in many markets, savers made strong gains in bonds, thanks to the turnaround in interest rates. This led, for example, to an 84.3% increase in securities purchases in Western Europe – European savers have never been more fond of capital market products. Finally, insurance/pensions proved to be relatively robust, with the decline in fresh savings worldwide amounting to just 4.9%.

Market developments are also the main reason for the huge differences in financial assets between the generations. The baby boomers are likely to be the richest generation that has ever lived, at least in the advanced economies. Assuming the same stylized savings behavior for the four generations of Baby Boomers, Gen X, Millennials and Gen Z and extrapolating market trends, none of the following generations can keep up with the Baby Boomers, who achieved total savings of just under 614% of disposable income with an average nominal return of 6.1% per year. The big losers are the Millennials – shortly after they began to accumulate wealth, crisis followed crisis, resulting in an annual return of just 3.1%. Members of Gen Z, however, have a good chance to outperform all their predecessors – if they align their savings behavior to the new realities (and are spared by mega crises).

In contrast to 2022, in which financial assets shrank in many markets and regions – and also worldwide – the recovery in 2023 was broad-based. In fact, only two countries – New Zealand and Thailand – recorded negative growth rates that year. Moreover, growth was relatively uniform across all regions, not least in Asia and North America, which both grew by over 8% – with the USA (8.6%) growing even more strongly than China (8.2%). Only Western Europe (5.0%), where the UK's weak performance (1.5%) dampened growth, and Eastern Europe (18.0%), where hyperinflation in Türkiye led to high (nominal) growth rates, were somewhat out of line.

The long-term development over the last 20 years naturally shows greater differences, with the catch-up effects of the emerging economies taking full effect: China, Latin America and Eastern Europe are achieving double-digit growth rates per year, while Japan is only growing at 2% and Western Europe at just under 4%. However, adjusting for population growth and inflation more than halves global growth, from 6.0% to 2.5%. Inflation is driving a large wedge between nominal and real growth rates particularly in Eastern Europe and Latin America. Only two markets escape this development: Japan and China. Although real growth is lower here too, the discrepancy is not very large. Per capita assets in Japan have actually grown slightly faster in real terms than in Western Europe over the last 20 years. And the gap between China and the rest of the world becomes huge in real terms: the growth advantage over the rest of the world is almost 10 percentage points per year. In fact, the purchasing power of average per capita financial assets in China has increased tenfold in just 20 years. 

The fact that the emerging economies have largely lost their growth lead in six of the last seven years is primarily due to developments in the USA. During this period, the financial assets of US households not only grew twice as fast as in Western Europe, but also faster than the global average and roughly on a par with Chinese financial assets. The consequence of this performance is reflected in the regional distribution of global financial assets: North America's share has barely changed in the last 20 years, almost half of all financial assets worldwide are held by households in North America. This supremacy is also reflected in the per capita financial assets, at least when looking at the averages: in fact, only the Swiss (EUR 382,910) are still richer than the US Americans (314,930). All other countries follow at a fair distance. Adjusted by liabilities, however, the USA overtakes Switzerland (EUR 260,320 vs EUR 255,440).

The (so far) positive trend on the stock markets and resilient economies should lift financial assets in 2024. Assuming stable savings efforts, we expect global financial assets to grow by 6.5% in 2024. The medium-term outlook, however, is overshadowed by uncertainties about the two megatrends of AI and sustainability. The potential of AI is undisputed, but it will probably be years before the AI boom reaches the entire economy and leads to productivity increases across the board. Disillusionment after the initial euphoria is already noticeable. Similarly, the necessity of the green transformation is not disputed. But the difficulties in terms of costs, technology and regulation are being perceived more strongly again. The green boom in the economy and stock markets is still a long time coming – but with the right (political) framework set, it is still possible. This brings the biggest problem into focus: political uncertainty, be it on a national level with the rise of extreme parties or on an international level with several geopolitical crises and increasing fragmentation. Against this background, only modest growth in global financial assets of 4% to 5% can be expected over the next few years – albeit with high volatility: the economy and markets are likely to oscillate between fear of crisis and euphoria about change.

The rise in interest rates had a clear impact on the liabilities side of private households' balance sheets in 2023: Growth in private debt weakened further to 4.1% worldwide, the lowest growth in nine years. Overall, the global liabilities of private households amounted to EUR 56.8trn at the end of 2023. The decline in debt growth was observed in almost all regions in 2023. It was particularly pronounced in Western Europe and North America, where growth more than halved to 1.1% and 2.9%, respectively. As nominal growth in global economic activity remained elevated by inflation, the global debt ratio (liabilities as a percentage of GDP) fell for the third year in a row, dropping by 1.5 pp to 65.4%. This was also more than 3 pp lower than in 2003.