The Allianz Global Wealth Report 2023 deemed 2022 to be a terrible year for savers, and as net financial assets plummeted 2.8%, household wealth in Malaysia decreased. The 14th edition of Allianz’s “Global Wealth Report” examines the assets and debts of families in nearly 60 nations.
With net financial assets per person of EUR 9,830 for 2022, the report stated that Malaysia has moved up two spots to take the position of 39th richest nation. Compared to 2021, the gross financial assets of Malaysian households only increased by 1.0% in 2022, mostly because the value of securities fell by 1.8%.
The other two major asset classes also underperformed, with bank deposits rising by 2.8% (5.6%) and insurance/pension, the biggest asset class in Malaysia with a 40% portfolio share, only marginally increasing by 1.6% (2021: 4.7%). However, liabilities grew more quickly, to 5.4 percent, following reporting a 4.2 percent gain in 2021.
Despite this, the debt-to-GDP ratio decreased by 8 percentage points to 81%, which is still 20 percentage points over the regional average. This was made possible by the robust nominal gross domestic product (GDP) growth.Savers have been complaining about zero interest rates for years, according to Ludovic Subran, chief economist at Allianz.
“However, inflation is the actual enemy of savers. And not just with the increase in inflation following COVID-19. Even in Malaysia, inflation has a significant negative impact on real growth; whereas assets per capita expanded by 320 percent before inflation during the past 20 years, the increase is only a less remarkable 110 percent when adjusted for purchasing power. This emphasises the necessity of wise saving practises and improved financial knowledge. However, inflation is a formidable foe. Most people might struggle without some encouragement and qualified counsel for long-term savings, he said.
The global fall in private household financial assets was 2.7%, the most since the Global Financial Crisis. Despite significant declines in securities (-7.3%) and insurance/pensions (-4.6%), bank deposits (+6.0%) grew strongly. Global financial assets should resume rise in 2023 following the decrease in 2022, driven primarily by the uptick in stock market activity.
“In total, we anticipate a growth in global financial assets of about 6%, while also accounting for additional “normalisation” of saving behaviour. “Savers should be spared another year of real losses on their financial assets given a global inflation rate of around 6% in 2023,” Allianz said in its study.
