The Philippine economy will remain one of the most dynamic in the region amid a marked decline in household wealth across Asia, according to the recent released Allianz Global Wealth Report, which assessed the global wealth and debt situation. The report showed a simultaneous decline in financial assets held by private households in 2018, the first time since the financial crisis more than a decade ago.
Gross financial assets declined by 0.4% in emerging-market economies, but the drop was more pronounced in Asia (excluding Japan) at 0.9%, the report showed. This was triggered by a sharp 14% fall in securities such as equity and investment funds, although bank deposits and insurance and pensions grew healthily by 8.7% and 8.2%, respectively, in Asia.
Savers worldwide found themselves in a bind, due to the escalating trade conflict between the United States and China, Brexit and increasing geopolitical tensions, the tightening of monetary conditions and the (announced) normalization of monetary policy, the Allianz Global Wealth Report said.
Wealth and debt indicators also remained positive, even with domestic inflation rising markedly to 5.2% in June 2018 from 2.9% in 2017. Caringal added that headline inflation has since cooled down, falling to a near 3-year low of 1.7% last month.
Philippine deposit and loan growth moderated in 2018: Consumer loans increased by 11.5%, against 17.2% in 2017, and deposits advanced by 8.9% (versus 11.6% in 2017).
The 2018 Allianz Global Wealth Report found that global gross financial assets of private households fell by 0.1% and remained more or less flat at EUR 172.5 trillion. Global equity prices fell by around 12% in 2018, which had a direct impact on asset growth.
Worldwide household liabilities rose by 5.7% in 2018, a tad below the previous year’s level of 6.0%, but also well above the long-term average annual growth rate of 3.6%. The global debt ratio (liabilities as a percentage of gross domestic product or GDP), however, remained stable at 65.1%, thanks to still robust economic growth.
The ranking of the richest countries/regions (financial assets per capita) is again topped by the USA, replacing Switzerland, not least thanks to the strong dollar. Singapore climbed to third place in 2018 capturing, for the first time, the crown as the richest country/region in Asia.
Looking at how the list has changed since the turn of the century, the rise of Asia becomes evident: The big winners include Singapore (+13 places) and Taiwan (+10 places) as well as – last year’s setback notwithstanding – China (+6 places) and South Korea (+5 places).
For the first time in over a decade, the global wealth middle class did not grow: At the end of 2018, roughly 1,040 million people belonged to the global wealth middle class – which is more or less the same number of people as one year before. Against the backdrop of shrinking assets in China, this does not come as a big surprise. Because up to now the emergence of the new global middle class was mainly a Chinese affair: Almost half of their members speak Chinese as well as 25% of the wealth upper class.
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