AVERAGE wealth among adults in Singapore has steadily increased since the global financial crisis in 2008, but the Republic’s wealth inequality has also risen in the same period and is higher than other markets such as Hong Kong, Indonesia and South Korea.
According to the UBS Wealth Report 2024 published on Wednesday (Jul 10), Singapore’s Gini coefficient – a measure of inequality – rose 22.9 per cent since 2008 to hit 70 in 2023, surpassing levels in several markets in the region.
This includes Indonesia, whose Gini coefficient rose 15.1 per cent in the same period to 68; Hong Kong, which was down 5.9 per cent in the period to 63, and South Korea, which fell 8.1 per cent to 57.
Meanwhile, average wealth per adult in Singapore, as measured by the mean, rose by more than 116 per cent in local currency since 2008. In contrast, median wealth per adult fell 2 per cent over this period.
This divergence suggests that the higher wealth brackets have experienced an opposite development compared with lower brackets, with the former booming while the latter has essentially stagnated, the report said.
Of the 56 sample markets in the report, Singapore ranks eighth in average wealth, but 18th in median wealth, in US dollar terms.
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Nevertheless, the report said inhabitants in Singapore are not necessarily worse off than their peers in Hong Kong, for example.
“Inequality benefits from being combined with absolute wealth levels in order to paint a comprehensive picture of a society’s wealth profile,” it said.
In fact, the report noted that average wealth in 2023 was significantly higher than median wealth per adult in most markets in its sample.
This happens when wealth figures are skewed upwards by a cluster of particularly high wealth at the top that overstates the wealth of the general population, while median wealth figures are less distorted by such extreme tail-end figures, it said.
Global wealth growth
In 2023, wealth around the world grew 4.2 per cent in US dollar terms, reversing from the 3 per cent contraction in 2022 that was largely attributed to a strong US dollar.
In Singapore, growth in average wealth per adult was 3.8 per cent in 2023, although this shrinks to less than 2 per cent when measured in local currency.
But while global wealth has been on a steady upwards trajectory since 2008, the pace of growth has lost steam in almost all markets, the report noted.
Wealth growth has fallen from an annual average of 7 per cent between 2000 and 2010, to barely over 4.5 per cent between 2010 and 2023, it found.
Demographics is one cause in markets such as Japan and Italy, where shrinking populations and ageing societies tend to reduce the level of economic activity.
The strength of the US dollar against most other currencies in its sample of markets since 2011 also explains some slowdown.
Meanwhile, other factors such as maturing economies in the Asia-Pacific and Latin America, as well as the sovereign debt crisis in Europe also played a part.
Overall wealth grew the fastest in the Asia-Pacific region, by nearly 177 per cent since 2008.
Yet the region also saw a significant spike in debt of 192 per cent, which is more than 20 times the growth in Europe, the Middle-East and Africa, and almost four times the figure for the Americas.
The report said it is not uncommon for emerging economies to experience fast growth in credit as the financial system develops and matures. It expects the rise in debt should flatten out as emerging economies mature.
Looking ahead, UBS expects wealth per adult will continue to grow in almost all of its sample markets, with upward wealth mobility likely to be more pronounced by 2030.
The chance of escaping from the lowest wealth bracket stands at over 60 per cent, and there is a one-in-three chance to move up by two or more wealth brackets, it said.
People in the middle bracket also have a nearly 40 per cent chance of moving up further, while half of the people in the highest bracket will have slipped down by one notch or more.
In Singapore, the number of millionaires will also likely grow by about 13 per cent to 375,725 in 2028, from 333,204 in 2023.
