The question of prosperity, inequality and the future prospects of the economy represents an important triangle that determines the fate of both Italy and Europe. This has proved especially true in the last three years, a period marked by the twin challenges of Covid and the monetary and energy crisis. A complex picture emerges in this context.
Although recent reports Credit Suisse to UBS While global economic potential outlines a positive outlook, we cannot ignore how wealth has been eroded widely, especially in the economies most affected by the significant events of the last three years.
however, in spite of Growing disparities between Europe and Italy, there are ample opportunities to improve the situation. The same report underlines that the national economic situation is not as pessimistic as we might imagine, especially if we compare it with Spain and Greece. However, achieving recovery and re-establishing a satisfactory level of prosperity in Italy will require considerable efforts and the implementation of well-calibrated policies.
Global money loss in Italy and Europe
according to new Global Wealth Report 2023 UBS and Credit Suisse have worldwide prospects 38% increase of wealth over the next five years. However, the existing difficulties need to be addressed for the time being. In recent years, an estimated $10.9 trillion in wealth has been lost between the United States and Europe, five times more than in Asia-Pacific. While China is battling a recession, India is showing signs of improvement. In parallel with the United States’ losses, Russia appears to be gaining, at least until the events of the war and the new interest rate announcement issued by Russia’s Central Bank.
In Europe, the main loss of money have faced Greece, Italy and Spain, with an average of 9.8%. Europe as a whole registered a decrease of 3.4%. Although there is a significant improvement in the two-year period of 2021-2022, it may not be enough for Italy, especially given the significant trend of public debt, which has increased from 129.6% to 162.6% during the pandemic . Although it has now come down to 144.7%, it is important to speed up the reduction process before it becomes unsustainable.
Equally worrisome is the propensity to save, an almost defensive strategy adopted by households. in Italy, Savings rate rises to 17.4% The percentage of GDP in 2020 was 10.0% in 2019, while in Spain it rose to 15.0% from 8.3%. This trend can contribute to rising inflation and poverty. In fact, the decline in savings (from 14.4% to 8.6% in 2022) has led to a reduction in wealth growth, from 4.9% annually in 2020 to 2.4% in 2022.
Currently, the property value per adult is $221,370, compared to $105,724 in Greece and $224,209 in Spain. Although money increased by 2.8%, the devaluation of recent years caused the dollar to fall by 6.1% in Italy and the euro by 0.3%. This situation has a negative impact on financial assets, especially investments made in the period before and after the pandemic.
Future of Financial Activities in the Next 5 Years
Economically, all countries suffered severe consequences, especially Greece, Italy and Spain. We begin by considering the fact that the share of financial assets in total wealth has progressively declined in these countries over the period 2000 to 2008–2010. Starting only in 2022, the overall composition of wealth has once again gained contextual importance in all three states. among these‘Italia emerges as Country with the highest interest in financial assets: He is the only one of the three with an average net worth of over $100,000. In contrast, it ranks second in the non-financial sector, with Spain leading the way. However, there is still an overall shortfall.
In 2000, 37.6% of gross wealth was made up of financial assets, which decreased to 36.3% in 2021 and which is now due to decrease to 35.3% in 2022.
Despite the funding challenges facing Italy and Europe, the future presents significant opportunities. The report forecasts that world wealth will increase by 38% over the next five years, reaching a record $629 trillion by 2027. Growth in middle-income countries will be the main driver of these global trends. However, it is important that the situation relating to inflation, interest rates and currency exchange is addressed, as he emphasizes Anthony Shorrocks, Economist and author of the report.
Shorrocks says: “Most of the decline in assets was due in 2022 due to high inflation and the appreciation of the US dollar against many other currencies. If exchange rates had remained constant as of 2021, total wealth would have increased by 3.4%, while per adult wealth would have increased by 2.2% in 2022. However, it should be noted that this is the slowest growth in wealth at constant exchange rates. 2008. Taking into account the effects of inflation holding exchange rates constant, there would be a loss of -2.6% of real wealth in 2022.
Furthermore, it is interesting to note that financial assets have largely contributed to the decline in wealth, while non-financial assets, especially real estate, have shown some resilience despite the rise in interest rates. However, it is possible that the relative contribution of financial and non-financial assets will reverse in 2023, especially if house prices fall in response to rising interest rates.
decline in wealth in italy
The inevitable decline in wealth in Italy and Europe has led to an increase in economic inequality, widening the gap between rich and poor. However, globally, the opposite has happened, with the wealthiest 1% of the world’s population holding a share of the wealth. decreased to 44.5%. The number of millionaires fell 6% to 59.4 million, but is expected to rise to 86 million by 2027.
The situation is quite different in Europe. To evaluate wealth inequality within a country, the Gini coefficient is used: a higher value indicates greater economic inequality. In northern countries such as France, Germany and the United Kingdom, the Gini coefficient in 2022 was 68.1 and the share of the richest 1% was 23.5% compared to 73.2 and 25.0% in the past.
In contrast, inequality has increased in Italy, Spain and Greece. from an average of 63.0 in 2000 to 68.1 in 2022, Interestingly, the number of millionaires in Italy is on the rise. In contrast, in Greece the Gini coefficient decreased slightly from 69.2 to 68.1 over the same period. Overall, inequality decreased from 2000 to 2008–2010, but then increased until 2021.