Israeli Household Wealth Grew 13% in Year, Among Highest Gains in World

But Credit Suisse report warns that growing global wealth inequality poses recession risk.

The richest 1% of the world’s population has gotten richer over the past year and now controls more than 48% of the world’s wealth, according to a report released on Tuesday by the Swiss bank Credit Suisse. It warned that the growing concentration of wealth in fewer hands could set off a recession.

In Israel, Credit Suisse found that household wealth grew 13% from 2013, making it among the fastest-growing economies. Among the 50 countries surveyed in the bank’s Global Wealth Report 2014, Israel was the eighth fastest-growing.

Worldwide, household wealth increased 8.3%. In the United States it climbed 11.4% and in Europe 10.6%.

But the gains were distributed unequally. In Israel, 67.3% of all wealth in the country was controlled by the wealthiest 10% of households. On this score, economic inequality in Israel was lower than in the United States, where the top 10% held 74.6% of the wealth, as well as Sweden (68.6%) and Switzerland (71.9%), but higher than countries such as Britain (54.1%), Italy (51.5%) and Germany (61.7%).

Moreover, the top 10% of Israeli households increased their share of the country’s total wealth over the last 14 years. In 2000, Credit Suisse said they controlled 62.4%, a figure that rose to 64.6% seven years later.

The report put Israeli among the world’s richest in term of capital, with an average of $150,000 per adult based on current exchange rates. But the number of Israeli millionaires didn’t grow very much in the 14 years, suggesting that the growth in wealth didn’t so much add to the rolls of the newly wealthy as it increased the wealth of those who were already at the top.

All told, the world’s wealth has more than doubled since 2000, to $263 trillion from $117 trillion. But although the Credit Suisse report was published by the bank’s Private Banking & Wealth Management division, it warned that the poor distribution of the world’s wealth risked sending the global economy into recession.

“For more than a century, the wealth income ratio has typically fallen in a narrow interval between 4 and 5. However, the ratio briefly rose above 6 in 1999 during the dotcom bubble and broke that barrier again during 2005–2007. It dropped sharply into the ‘normal band’ following the financial crisis, but the decline has since been reversed, and the ratio is now at a recent record high level of 6.5, matched previously only during the great Depression,” the report said.

“This is a worrying signal given that abnormally high wealth income ratios have always signaled recession in the past,” it concluded.

Interestingly, it doesn’t take much capital to be counted in the top half of the world’s most wealthy. According to Credit Suisse it takes just $3,650, including the value of home equity, to be in the top 50%. To reach the top 10% globally, the cutoff is $77,000, but to be in the top 1% it takes at least $798,000.

“Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets,” said the report, now in its fifth year.

Among the Group of Seven, or G-7 countries, only Britain showed an increase in wealth inequality in the 21st century, Credit Suisse said.