South African household wealth continues to grow – but purchasing power declines

Global household wealth saw its largest decline since the financial crisis of 2008/09 in 2022. However, South Africa bucked this trend as the country’s household wealth grew by 1.7% last year. 

This was revealed in the Allianz Global Wealth Report for 2023, which documented a decline in global household wealth of 2.7% in 2022 while South Africa’s grew. 

“Last year was very, very bad for savers and investors around the world,” the head of insurance, wealth, and trends at Allianz, Arne Holzhausen, told CNBC Africa

Global savings and wealth are still above pre-pandemic numbers as people continue to save money. 

However, high inflation has eroded the value of savings around the world. Adding average global inflation to the 2.7% decline in household wealth results in people losing nearly 10% of their wealth in 2022. 

In developed economies with abnormally high inflation rates, such as Germany and the United States, households lost 12% and 15% of their wealth last year. 

“This is an awful development. Compared to this, South Africa definitely performed better,” Holzhausen said. 

Despite bucking the global trend, Holzhausen cautioned against being overly optimistic as a growth rate of 1.7% is very weak considering historical averages. 

When accounting for inflation, South Africans still saw their wealth decrease in 2022 and their purchasing power was significantly eroded. 

Holzhausen said that the country should still take this development positively as it exemplified the resiliency of South African households to emerge from 2022 without a decline in wealth. 

South Africa managed to grow its wealth while many countries, particularly its emerging market peers, struggled because of the sophisticated nature of South Africans’ savings and financial system. 

Holzhausen said South African savers tend to have a long-term orientation, with Allianz seeing a high demand for insurance and pension products in the country. 

Nearly 55% of all savings are put into insurance schemes and pension funds. 

This indicates that South Africans are relatively sophisticated in saving behaviour compared to their emerging market peers and are comparable to more developed markets. 

Individuals from other emerging markets prefer simple savings products such as bank deposits, which may be beneficial in the short term but will not produce good returns in the long run. 

On the other hand, South African savers are well-equipped to build long-term wealth through savings products with diversified investments, such as pensions and retirement funds. 


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