The Strategist

Allianz: China's slowdown and general economic uncertainty froze middle class growth


09/20/2019 - 10:07



The slowdown in the growth of the global economy pinned the size of the global middle class at around 1 billion people. The growth of this part of the world's population stopped for the first time in the last ten years, Allianz experts note. Besides, total size of global financial assets of households froze at the level of € 172.5 trillion due to disruptions in the usual economic order.



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Financial assets of the population of industrial and developing countries in 2018 decreased. Such a situation is a unique phenomenon, which has not been observed even during the 2008 global crisis, the Allianz Global Wealth Report says. The company’s experts analyzed the wealth and monetary obligations of residents in more than 50 countries. Among other things, the trade wars between the US and China and the Brexit situation affected savings. Quotations of securities last year fell by an average of 12%; the global financial assets of households lost 0.1%, freezing at € 172.5 trillion.

“The growing uncertainty is doing its job,” says Allianz chief economist Michael Heise. “The destruction of the usual world economic order adversely affects savings. Economic relations are not a competition. Either everyone wins, as it was before, or loses, as happened last year.”

Household liabilities around the world in 2018 grew by 5.7% (the growth was 6% a year earlier), which is higher than the long-term average annual growth rate of 3.6%.

The global debt ratio (liabilities as a percentage of GDP) remained at 65.1%. Moreover, in Eastern Europe, the debt ratio has not changed much since the financial crisis. In Asia (excluding Japan), over the past ten years it has grown by more than 20%.

On a global scale, the share of the global middle class for the first time in ten years showed no increase. By the end of 2018, about 1.04 billion people belonged to this stratum; almost half of them speak Chinese. Earlier, it was China that provided the growth of the middle class. Now, according to researchers from Allianz, we can talk about other countries with a large population: India, Indonesia, Brazil and Russia. If they have a level and distribution of welfare comparable to China, the global middle class will increase by 350 million people.

source: allianz.com




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