Israeli Household Wealth Fails to Keep Pace With GDP

Nevertheless, Credit Suisse finds wealth has doubled in 19 years, estimates Israel has about 131,000 millionaires

The logo of Swiss bank Credit Suisse is seen at its headquarters at the Paradeplatz square in Zurich, Switzerland, October 1, 2019.
\ ARND WIEGMANN/ REUTERS

Nearly two decades of uninterrupted economic growth and a steady stream of high-tech successes haven’t yielded the number of millionaires it should have, Credit Suisse said in its 2019 Global Wealth Report.

Growth of per capita gross domestic product and household wealth normally go hand in hand, the report released on Monday stated, but in Israel’s case while GDP per capita rose an average of 1.4% annually from 2000 to 2019, average wealth per capita edged up just 0.2%.

The only other surveyed country to show such a mismatch between GDP growth and increased wealth was Indonesia, Credit Suisse noted.

Nevertheless, Israelis doubled their combined household wealth in the 19 years from $465 billion in 2000 to $1.08 trillion in 2019, based on current exchange rates, Credit Suisse said. After taking into account population growth, the average Israeli household had $196,568 in assets in 2019, up from $122,500 in 2000.

Last year, Israeli household wealth grew an unusually sharp 2.7%, making it No. 7 in the world for annual growth.

Israel counted about 131,000 millionaires in 2019, a relatively large number compared to its population. But Credit Suisse had predicted in 2014 that the number would grow a relatively modest 32% to 173,000 by 2019. By comparison, China’s millionaire population was forecast to grow 55% and Japan’s by 71%.

Credit Suisse said the last decade, since it began publishing the annual report, saw a 70% increase in global wealth to $360.6 trillion this year. North America is still the leader, accounting for $114.6 trillion of that amount, but emerging economies including China have accounted for two thirds of the real wealth gain since the 2008 financial crisis.

China overtook the United States this year to become the country with the most people in the top 10% of global wealth distribution, the report said. But the United States still leads in the number of millionaires by a wide margin – 18,614,000 versus 4,447,000 – as of 2019.

The bottom half of wealth holders globally collectively accounted for less than 1% of total global wealth in mid-2019, while the richest 10% owned 82% and the top 1% alone owned 45%, Credit Suisse reported.

Global wealth inequality within countries has been growing since the global financial crisis, with the top 1% of wealth holders increasing their share of world wealth, the bank said. But, it added, “This trend appears to have abated in 2016 and global inequality is now likely to edge downward in the immediate future.”

In Israel, however, average wealth rose this year 2019, while median wealth fell to just over $58,066 in assets, down from $59,200 in 2018 and $63,200 in 2017. That meant more money flowed to the higher wealth deciles than to the lower deciles, and inequality expanded.

That trend was evidenced by the division of household wealth in Israel. Adults with less than $10,000 in assets accounted for 18% of the population; those with $10,000-$100,000 accounted for 46.2%; those with $100,000-$1 million for 33.5%; and those with $1 million or more for 2.4%.

By comparison, in Spain, whose per capita GDP is about the same as Israel’s, those with less than $10,000 comprised only 16.9% of the adult population; those with $10,0000-$100,000 34.5%; and those with $100,000-$1 million 45.9%. At 2.6%, however, Spain had a slightly higher rate of millionaires.

Regarding Israeli millionaires, Credit Suisse estimated that 113,800 had up to $5 million. Another 9,980 had $5 million-$10 million; 6,183 $10 million-$50 million; 542 $50 million-$100 million; and 336 $50 millions to $100 million.

Only about 50 Israelis had fortunes as of 2019 of $500 million or more, it estimated.