Business Forum • 29 July, 2024 at 10:56 AM
Romanians' financial wealth will grow at an average rate of about 9% over the next five years, one percentage point faster than the average forecast for Eastern Europe and three percentage points above the expected average global growth rate, according to the BCG Global Wealth Report 2024: The GenAI Era Unfolds, the 24th global wealth report from Boston Consulting Group (BCG).
Romanians' financial wealth, valued at $300 billion, accounted for 5.7% of the Eastern European region's financial wealth in 2023, growing at an annualized rate of 15.5% between 2018-2023. The BCG report estimates that the financial wealth of Romanians will grow by 8.6% per year over the next 5 years, reaching $400 billion in 2028.
The share of long-term investments, non-investable wealth, consisting mainly of life insurance and pension savings, accounts for 40% of Romanians' total financial wealth, well above the Eastern European average (31%), but also above the global average (35%). At the same time, the share of investable wealth, which includes cash, deposits, investment funds, stocks and bonds, is slowly but steadily decreasing, a trend opposite to the one we observe at the global level.
Krisztian Horvath, Partner and Associate Director, Wealth Management, BCG: "Romanians keep a relatively low share of their wealth in cash and deposits (34%), compared to the average in Eastern Europe (44%). We also see a very high share of other investments, at 20%, in non-listed equities and smaller asset classes, which is rare in other regions, where the global average is only 2% and the Eastern European average is 8%."
The distribution of financial wealth shows a mixed picture in Romania. On the one hand, it is healthy from the perspective that up to half of Romanians' financial wealth is held by people with assets under $250,000, a much higher proportion than the global average of 30%. In contrast, the share of the very rich, with financial wealth in excess of $100 million, is also significantly higher than the global average. Romanians with fortunes of more than $100 million hold 23% of total financial wealth, compared to a 14% share of the very rich globally.
"Over the next five years we expect strong growth in segments attractive to private banks, such as those with financial wealth between $250 thousand and $20 million. The expected growth of this segment of the population, from around 60,000 to 85,000, provides attractive acquisition opportunities for banks offering customized solutions dedicated to this segment," Krisztian Horvath added.
In terms of overall net worth, it recovered significantly in 2023, up 4.3% after a difficult year in 2022. Much of this growth was due to a rebound in the financial market, as financial wealth grew by almost 7% after a 4% decline in 2022. About $92 trillion in financial wealth is estimated to be created over the next five years.
Financial wealth in North America and Western Europe saw a rebound in 2023. Supported by strong capital markets, North America was among the fastest growing regions, accounting for more than 50% of all new financial wealth created in 2023. The recovery was not as strong in Western Europe, where financial wealth grew by just 4.4%.
Although financial wealth in the Asia-Pacific region grew by only 5.1% in 2023, mainly due to the slowdown in wealth creation in China, significant growth is anticipated by 2028, with the region expected to contribute nearly 30% of new financial wealth by 2028. Alongside China, India is well positioned to be an engine of wealth growth, generating an estimated $590 billion in new financial wealth in 2023, the highest growth on record.