State Assets Continue to Increase

The UBS Global *Global Wealth Report 2024* shows that the share of wealth in developing countries continues to rise.

Specifically, in 2008 it stood at 16.43%. This share increased to 25.42% in 2015.

Then, in 2020, at the onset of the Covid-19 pandemic, the share of wealth in developing countries continued to rise, reaching 27.07%. By 2023, this proportion had grown to 29.26%.

UBS projects that the share of wealth in developing countries will reach 31.88% by 2028.

Furthermore, UBS notes that the Asia-Pacific region experienced the most significant wealth growth, increasing by almost 177% since the 2008-2009 financial crisis.

This was followed by the Americas with an almost 146% increase, leaving Europe, the Middle East, and Africa (EMEA) with an increase of less than 44%.

However, UBS explains that the remarkable growth in financial and non-financial wealth in the Asia-Pacific region is coupled with a substantial surge in debt. Total debt in this region has grown by more than 192% since 2008, twenty times the growth in EMEA and almost four times that of the Americas.

"Debt growth in EMEA was relatively subdued at under 9%, significantly below the Americas which reached almost 49%," UBS wrote in its report, as quoted on Sunday (August 25, 2024).

One reason for the relatively low debt growth in the West is that many households in the United States and Europe had to pay down debt over the past decade following the "great financial crisis."

However, UBS assesses that increasing debt is not necessarily negative. It argues that it's not unusual for developing countries to experience rapid credit growth as their financial systems develop and mature.

"Indeed, rising prosperity allows households to take on more debt, which to a certain extent makes perfect sense, especially if that debt is used to finance relatively safe assets such as owner-occupied property," UBS stated.

The caveat is that if debt continues to grow faster than economic growth, UBS believes that is when societies and nations have reason for concern.