The ultra-wealthy populations in the BRICS countries have prospered in recent years, increasing in number by almost a third and largely withstanding the global financial crisis. Yet with considerable challenges ahead for each member, can the BRICS’ HNWIs keep building their wealth?
According to WealthInsight, the London based global wealth consultancy, the total number of high net worth individuals (HNWIs) in the BRICS countries has increased by 30% over the past 4 years. In 2007 there were 1.5 million HNWIs in Brazil, Russia, India, China, and South Africa; as of 2011 there are 1.9 million wealthy individuals in these countries combined. By 2016 this figure is projected to almost double to reach 3.5 million HNWIs.
Total Number of HNWIs
China accounts for the greatest share of the BRICS’ wealthy population. As of 2011, two-thirds of HNWIs coming from the BRICS are Chinese, a ratio expected to increase by 2016. South Africa has by far the smallest share of high net-worths, unsurprising due to its far smaller overall population.
Looking at changes in total wealth figures since 2007, it is evident that wealthy individuals in the BRICS have not escaped turmoil in the global economy. While the broader outlook for the wealth sectors in these countries points towards strong growth, the last year has been particularly challenging for wealth formation in the face of an uncertain economic climate and losses in some local stock markets.
Total Wealth of HNWIs ($bn)
Risks to economic growth will continue as uncertainties remain in the global economy, with important implications for wealth managers. If current fears over a Chinese hard-landing were to fully materialize HNWIs in the country would be severely affected: asset prices would fall and wealth be destroyed. WealthInsight analysis finds that China would have some 80,000 fewer HNWIs in 2016 if GDP growth were to fall to an annual rate of 6%. The likelihood of this scenario is hard to judge; the IMF has observed that the Chinese economy appears to be undergoing a soft landing, indicating growth rates of 7-8% per year.