In Germany, the financial landscape isn't firing on all cylinders. Allianz's annual "Global Wealth Report" paints a grim picture, with Germany barely cracking the top 20. The country ranks a disappointing 19th, holding net financial assets per capita of 63,540 euros.
The rich get richer, it seems
The United States steals the show, topping the wealth ranking with an impressive net financial assets per capita of 253,450 euros. Switzerland follows suit in second place with 238,780 euros, while Denmark takes the bronze medal with 163,830 euros.
Interestingly, Austria manages to outshine Germany, snagging the 18th spot with 65,330 euros. As this year's data indicates, the U.S. has outperformed Germany in the economic arena.
The magic of the market
The Americans' enviable position can be attributed to their thrifty saving habits and an exceptional knack for capitalizing on market returns. Over the past two decades, they've managed to harness the power of compound interest, leveraging the U.S. stock market's smooth operation.
Germans, in contrast, have primarily grown their wealth by bolstering their savings accounts. Allianz's experts contend that while U.S. investors allow the markets to do the heavy lifting, their German counterparts rely more on their own ingenuity.
Wealth Ranking: The hard facts of Germany's economic struggle
Allianz's research confirms that private households worldwide suffered substantial losses on their investments in 2022 – the worst since the 2008 global financial crisis. Germany takes the most significant hit, with a 2.7% decrease in financial assets, amounting to 233 trillion euros.
The country faced a remarkable decline of 4.9%, which is higher than its 2008 plunge of 4.5%. Inflation has gnawed away at over two-thirds of the wealth growth seen since 2019. From a nominal growth of 19%, only 6.6% remains in real terms.
Despite these setbacks, Germans remain steadfast in their investment in capital markets, with 37% of reinvested money directed towards capital market products – primarily funds – in 2022. Experts predict a 6% growth worldwide and a 3% boost in Germany's financial assets in 2023. Yet, thisёst still insufficient to counteract the ongoing inflation.
In Summary:
Austria's position above Germany in the wealth ranking and the U.S.'s dominance atop the ranking remain problematic for both countries. German investors favor self-driven saving strategies, contrasting the U.S. approach of allowing markets to flourish and maximize returns.
Related topics:
- Despite Austria's advantage over Germany, both nations face financial challenges, with the U.S. leading the pack with the highest net financial assets per capita.
- With the Germans mainly growing their wealth through new savings, Allianz identifies a stark contrast in investing approaches between them and U.S. investors who rely on market returns.
Enrichment Data:
- Germany's challenges stem from various factors, including an aging population, dependence on international trade, a skilled labor shortage, subdued medium-term growth prospects, rising poverty rates, and the energy crisis.
- The country's aging population, coupled with decreasing birth rates and increasing government spending to support pensioners and healthcare, is affecting Germany's economic stability.
- The reliance on exporter industries and international trade leaves Germany susceptible to market fluctuations and global trade tensions.
- A lack of skilled workers in sectors like manufacturing and technology is a significant hurdle for Germany.
- Weak investment and subdued growth prospects, exacerbated by demographic challenges and the requirement for significant reforms, hinder Germany's economic growth.
- Rising poverty rates and homelessness, particularly among children, indicate broader social issues that impact overall wealth distribution and economic stability.
- The 2022 global energy crisis and the anticipated end of Russian energy imports have negatively affected Germany. Higher energy prices are set to hurt economic growth even further.
