Leading consulting firm predicts UAE financial wealth will reach $1 trillion by 2026

Leading consulting firm predicts UAE financial wealth will reach $1 trillion by 2026 :

Leading consulting firm predicts UAE financial wealth will reach $1 trillion by 2026

According to a new report by management consultancy firm Boston Consulting Group (BCG), UAE’s financial wealth is expected to reach $1 trillion in 2026. The report shows that the country’s financial wealth is predicted to increase at a compound annual rate of 6.7% from $700 billion. This exponential growth is reportedly driven by financial and real assets growth.

The report, titled “Global Wealth 2022: Standing Still Is Not an Option”, shows that the accelerating financial wealth is not limited to UAE. Global financial wealth increased by 10.6% in 2021 to reach a value of $530 trillion. Notably, this is the fastest growth that has been observed in more than a decade. It thus appears that the current upward trajectory of financial wealth is a global theme.

What is the projected outlook for UAE’s financial performance?

It is, however, worth noting that financial wealth in UAE is growing faster than the global rate. In 2021, financial wealth in the UAE grew by an annual 20% relative to the 11% recorded globally. The country had a net inflow of over 2000 millionaires. This was, no doubt, a pivotal factor in helping the Emirate contribute 30% of the total financial wealth in the GCC. Notably, the GCC’s growth in financial wealth was at an annual rate of 9% last year. The GCC was able to grow its financial wealth to a figure of $7 trillion.

Regarding the trends, Mustafa Bosca, managing director and partner of BCG, stated that the UAE represented 10.2% of the Middle East and Africa’s financial wealth in 2021. Bosca further explained that the Emirate had experienced a growth of 6.4% every year since 2016 to reach the figure of $700 billion. Bosca added that the growth in the UAE and GCC wealth was equally distributed between financial wealth, such as equities, bonds, cash and deposits, and real assets.

Notably, the report indicates that equities and investment funds in the UAE currently make up the largest asset class. This asset class constituted 64% of total personal wealth in 2021. Furthermore, equities and investment funds are expected to grow the fastest by 2026, with a CAGR of 8.8%. On the other hand, currency and deposits represent the second largest class, contributing 29% of total personal wealth in 2021. Bonds constituted a mere 3% of personal wealth in 2021. Noteworthy, the report predicts that life insurance and pensions will become the fourth largest asset class by 2026.

Finally, another important insight from the report is that about 41% of UAE’s wealth was contributed by individuals who were Ultra High Net Worth (HNW). These are individuals who are worth more than $100 million. The contribution of the class of individuals is expected to increase to 43% by 2023. Also noteworthy, individuals worth above $1 million contributed 28% of the country’s wealth in 2021. This contribution is, however, expected to remain constant till 2026.

Last Updated on 9 months by News Editor