The recently published Allianz Global Wealth Report 2023 revealed that Malaysian households’ wealth had dipped in 2022, with a 2.8% decline in net financial assets. Accordingly, the net financial assets per capita for Malaysia also fell from EUR 10,040 in 2021 to EUR 9,830.

According to the report, this decline can be attributed to a few factors, including the slower growth of gross financial assets in general and an increase in liabilities. With regard to the former, Malaysian households’ gross financial assets saw only a 1% growth in 2022, as compared to 2.4% in 2021 – caused mainly by a dip in securities value (1.8%).

Additionally, two major financial instruments that Malaysians typically opt for for their savings – insurance/pension and bank deposits – also recorded dismal performances. Specifically, insurance/pension increased by a marginal 1.6% (as compared to 4.7% in 2021), while bank deposits grew only by 2.8% (5.6% in 2021).

This situation is further impacted by an accelerated growth of household liabilities in 2022, at a rate of 5.4%. For comparison, growth in liabilities was recorded at a lower 4.2% back in 2021.

The report also highlighted the impact of inflation on savings – not just for Malaysia, but globally. “For years, savers complained about zero interest rates. But the real enemy of savers is inflation. And not only since the inflation surge after Covid-19. Even in Malaysia, inflation drives a big wedge between nominal and real growth: while assets per capita increased by 320% before inflation over the last 20 years, but adjusted for purchasing power, the increase is actually a less impressive 110%,” said chief economist of Allianz, Ludovic Subran.

As such, Subran commented that it is crucial for individuals to enhance their financial literacy and learn to save intelligently. “Without some nudges and professional advice for long-term savings, most savers might struggle,” he added.

Despite the difficult year that 2022 had been for savers all around the world, however – with a loss of EUR 6.6 trillion in financial assets globally – Allianz said that it foresees better days moving forward. “All in all, we expect global financial assets to increase by around 6%, also taking into account a further ‘normalisation’ of savings behaviour. Given a global inflation rate of around 6% in 2023, savers should be spared another year of real losses on their financial assets,” it shared.

The Allianz Global Wealth Report is an annual publication, and the latest 2023 Wealth Report is its 14^th edition. The report sought to analyse the asset and debt situation of households in almost 60 countries.

(Sources: Allianz Group Economic Research, New Straits Times)

• TAGS:
• Allianz Group Economic Research
• Household Wealth
• Inflation
• Ludovic Subran
• Net Financial Assets