But the positive development seen last year is not enough to paper over the deep cracks in private asset balance sheets in the euro area. The wealth gap is getting wider and wider. Average net financial assets in Greece now come in at only 28% of the eurozone average; before the crisis hit, this figure was still well above the 50% mark. In Spain, the figure slipped from 61% to 44% last year. "The growing wealth gap in the eurozone is an upshot of the crisis," said Michael Heise, Chief Economist at Allianz. "If this gap between north and south widens further it could undermine European cohesion. The reform drives to date are starting to bear fruit this year. Further resolute steps towards integration are needed in order to give all Europeans a clear prospect of growth and prosperity again. "
Asset development in Germany was extremely solid last year, with gross financial assets up by 4.9% and net financial assets growing by 6.8%. This puts Germany in the middle of the European rankings. A longer-term analysis casts Germany's development in a much better light: thanks to strict debt abstinence, net per capita financial assets were almost 18% higher than they were before the crisis by the end of 2012 – this growth rate is unrivalled by any other major EMU country; the only other countries to achieve double-digit growth during this period were the Netherlands and Austria.
In a global comparison, however, German was still stuck in 17th place on the list of the richest countries, with average net per capita financial assets totaling EUR 41,950 at the end of 2012 (see table). The gap separating it from nations like France and Italy, which are (even) better placed, however, has narrowed considerably. "Germany's savers have weathered the crisis fairly well to date," said Heise. "The high propensity to save, coupled with healthy earnings growth, has so far managed to offset the steep drop in interest rates. But there is no room for complacency, Germany’s midfield ranking is nothing to be proud of. The topic of long-term asset accumulation belongs on the political agenda, particularly given the looming demographic change.”
Germany's relatively good performance and the strong development seen last year should not, however, tempt us to conclude that the extremely low interest rates are having no impact on asset development at all. The very opposite is the case, as the analysis of savings behavior in the US and the euro area shows. Savers have adopted a marked preference for liquidity in recent years: the slice of the financial asset accumulation cake consisting of bank deposits has become much bigger in the years marred by the crisis. Over the past five years, banks were on the receiving end of more than half of "fresh" savings funds in the eurozone on average, and as much as two-thirds of these funds in the US. The tendency to shy away from long-term investments, which offer a reasonable risk/return profile, only exacerbates the long-term implications of the low interest rates as far as asset accumulation is concerned. As a result, financial asset growth is almost starting to resemble Japan, at least in a longer-term analysis: since the Lehman collapse, the average growth in gross per capita financial assets has come in at 0% (Japan), 0.1% (US) and 1.1% (euro area); in the comparable period before the crisis, by contrast, the range still stretched from 1.6% in Japan to 10.3% in the US. Asset distribution is also suffering as a result of the crisis and the low interest rates. In the US and the eurozone, the number of members of the global high wealth class1 has declined in both absolute and relative (proportion of the total population) terms; in Japan, the figures have stagnated. On the other hand, there are more people sitting in the low wealth segment in all three regions today: this segment makes up 30% of the population in both the eurozone and the US, and around 10% in Japan. The marked disparities in wealth in the US and the eurozone raise concerns that cracks in the social fabric due to the zero interest rate policy will become much faster evident in these regions than in Japan, which is still fairly egalitarian. "The final bill for the low interest rate policy will not hit home until further down the road," commented Heise.
Whereas the crisis has caused the "low wealth" class to grow in the established advanced economies, the development in the poorer countries has been more encouraging: here, the main trend has been an increase in the number of members of the global wealth middle class. Last year alone, it grew by almost 140 million people, with China responsible for the lion's share of this growth. This means that a total of around 860 million people with medium net financial assets lived in the countries included in our analysis in 2012. But it was not just last year that the momentum driving the rise of the global middle class was astounding. Over the past twelve years, the emerging markets, in particular, have made incredible progress: since the turn of the millennium, the share of the population ranking among the wealth middle class in global terms has doubled in eastern Europe and Latin America and has increased almost ten-fold in Asia (excl. Japan). This means that the face of the global wealth middle class has changed considerably: in 2000, almost 60% of its members still hailed from North America or western Europe. Today, every second member is from Asia - a trend that is projected to continue. The share attributable to North America and western Europe has fallen below the 30% mark.
This catch-up process has been driven by the continued strong growth in gross financial assets. Despite a marked slowdown since 2007, eastern Europe remains the regional growth champion in a long-term comparison, with average annual growth of 14.7% in the period between 2001 and 2012. Asia (excl. Japan) is hot on its heels, followed by Latin America. But there is a fly in this soup: the growth in personal debt has been even faster than asset growth. Over the past twelve years, eastern European households have been upping their liabilities by an average of 25.4% a year. Following in the footsteps of asset growth, debt growth has, however, slowed in the region since the financial crisis set in. There were no signs of a similar phenomenon in the other emerging regions of Latin America and Asia (excl. Japan). Private households in Latin America have kept their average debt growth constant in the period before and after 2007, at around 17%; in Asia (excl. Japan), the average annual growth rate has actually increased from 12.3% in the period between 2003 and 2007 to 15.8% in the period between 2008 and 2012. "Although personal debt is still at a low level in most of these countries, we need to keep a very close eye on the debt momentum. These countries should not make the same mistakes as the Europeans and the Americans: debt-fueled growth is never sustainable," said Heise.