Welcome to Extreme Investor Network, where we provide unique insights and expert analysis on the latest economic trends and developments around the world. In this blog post, we’ll take a closer look at Turkey’s recent performance in the global wealth ranking, as reported by the Swiss bank UBS in its Global Wealth Report 2024.
Despite facing high levels of inflation, Turkey has seen a staggering growth of over 157% in wealth per adult between 2022 and 2023, surpassing all other nations by a wide margin. This growth far outpaces countries like Russia, Qatar, and South Africa, which saw more modest increases in average wealth per adult.
While inflation in Turkey is currently sitting at almost 72%, leading to a significant drop in purchasing power for many citizens, those who own assets like homes have actually seen their wealth grow. This is due to the fact that inflation tends to push up the value of real assets like housing, resulting in faster wealth accumulation for asset owners.
UBS economists point out the important relationship between inflation and wealth growth, highlighting how high inflation rates can actually drive up the value of assets, leading to substantial wealth gains for certain individuals. However, it’s important to note that not everyone benefits equally from this phenomenon, as those without assets or whose wages do not keep pace with inflation may be negatively impacted.
One key factor influencing wealth growth in different countries is the “currency effect”, which can significantly alter wealth growth figures when comparing them in local currency versus U.S. dollar terms. For example, Turkey’s wealth growth of over 63% in USD more than doubles to nearly 158% when measured in Turkish lira.
Looking at the period between 2008 and 2023, UBS reported that Turkey experienced the most dramatic evolution in average wealth per adult, increasing by a whopping 1708% in local currency. However, Chief Economist Paul Donovan warns that being asset-rich does not necessarily equate to being cash-rich, highlighting the importance of considering real wage trends in addition to asset values.
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