The Financial Wealth of Romanians in Eastern Europe
According to the Boston Consulting Group Global Wealth Report 2024: The GenAI Era Unfolds, Romanians hold 5.7% of the financial wealth in the Eastern European region.
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The global financial wealth increased by nearly 7% in 2023, reaching 275 trillion dollars, after a 4% decline in 2022. North America was among the regions with the fastest growth, accounting for over 50% of all new financial wealth created in 2023.
The financial wealth of Romanians is expected to grow at an average rate of around 9% over the next five years, one percentage point faster than the forecasted average for Eastern Europe and three percentage points above the expected global average growth rate, as stated in the BCG Global Wealth Report 2024: The GenAI Era Unfolds, the 24th global wealth report compiled by the Boston Consulting Group.
The Financial Wealth of Romanians
In 2023, the financial wealth of Romanians was estimated at 300 billion dollars, representing 5.7% of the financial wealth of the Eastern Europe region. This wealth experienced an annual growth rate of 15.5% from 2018 to 2023. According to the BCG report, it is projected that the financial wealth of Romanians will increase by 8.6% annually over the next 5 years, reaching 400 billion dollars by 2028.
Long-term investments, non-investable wealth consisting mainly of life insurance and pension savings, account for 40% of the total financial wealth of the Romanian people, which is significantly higher than the Eastern Europe average (31%) and the global average (35%). At the same time, the proportion of investable wealth, including cash, deposits, investment funds, stocks, and bonds, is slowly but steadily decreasing, a trend that is opposite to the global trend.
The Importance of Diversifying Investments
Prime Minister states that he will always intervene in the car insurance market if there is any “emotion” involved, referring to increases in fuel or concrete prices, but believes that, outside of these moments, the market should be left to function.
Investment Trends in Romania
Krisztian Horvath, Partner and Associate Director, Wealth Management, BCG: “Romanians hold a relatively low share of their wealth in cash and deposits (34%), compared to the Eastern European average (44%). We also observe a very high share of other investments, at 20%, in unlisted stocks and smaller asset classes, which is rarely seen in other regions, where the global average is only 2%, and the Eastern European average is 8%.”
On one hand, this is healthy as up to half of Romanians’ financial wealth is held by individuals with assets under 250 thousand dollars, a much higher proportion than the global average of 30%. However, the share of those with assets over 1 million dollars is lower than the global average.
The Rise of High Net Worth Individuals in Romania
Romanians with a financial wealth exceeding 100 million dollars are significantly wealthier than the global average. They hold 23% of the total financial wealth, compared to the global rate of 14% for the ultra-rich.
The Future of Private Banking in Romania
Over the next five years, a strong growth is expected in segments attractive to private banks, such as individuals with financial wealth ranging from 250 thousand to 20 million dollars. The projected increase in this population segment, from around 60,000 to 85,000, provides attractive acquisition opportunities for banks that offer personalized solutions tailored to this segment’s needs.
The Global Wealth Recovery in 2023
In terms of global net wealth, there has been a significant recovery in 2023, with a 4.3% increase after a challenging year in 2022. Much of this growth was due to a comeback in the financial market, as financial wealth rose by almost 7%, following a 4% decline in 2022. It is estimated that approximately $92 trillion will be created in financial wealth in the next five years.
Regional Trends in Wealth Recovery
The financial wealth in North America and Western Europe saw a resurgence in 2023. Supported by strong capital markets, North America was among the regions with the fastest growth, accounting for over 50% of all new financial wealth created in 2023. The recovery was not as strong in Western Europe, where financial wealth only grew by 4.4%.
Alternative Routes
Even though the financial wealth in the Asia-Pacific region only grew by 5.1% in 2023, mainly due to the slowing wealth creation in China, a significant increase is anticipated by 2028. The region is expected to contribute nearly 30% of the new financial wealth by 2028. Apart from China, India is well positioned to be a growth engine of wealth, generating approximately $590 billion in new financial wealth in 2023, the largest increase in history.
