The number of millionaires in Canada will jump more than half in the next five years, a faster growth rate than other developed countries like the United States, according to a new wealth report by bank giant Credit Suisse.
Canada had 1.3 million millionaires in 2018, and is expected to rise by 54 percent to nearly two million people by 2023, said the Global Wealth Report 2018.
Canada is ranked third – behind China and Russia – out of 24 major economies when it comes to the largest percentage gain in millionaires population over the next five years. By comparison, the number of millionaires in the US will grow 18 percent to over 20 million people in the same period of time.
The bank used financial and non-financial assets of wealth such as home ownership and economic indicators such as GDP (Gross Domestic Product) and inflation from the last IMF economic outlook database to create forecasts.
Housing Market Values
High property values will continue to be an important driving force for household wealth in Canada, despite recent cooling on the property market, the report says.
"One of the prerequisites for the increase in the number of millionaires is that Canadians' housing wealth will continue to rise ̵[ads1]1; no breakdown in that market," said Jim Davies, a writer of the study and economics professor at Western University.
Data released by the Canadian Property Association earlier this week showed that home sales fell almost nine percent in September as compared to a year ago. However, the national average price of a home sold last month increased 0.2 percent to just under $ 487,000 from a year ago.
Another reason for the large expected increase in millionaires in Canada is that at the moment many wealthy people are just under $ 1 million American, Davies said.
" The foreseeable increase in wealth over the five years will take everyone with wealth equal to more than three times the average now into the millionaire group if it happened today," Davies said.
More than 46 percent of Canadians have wealth between $ 100,000 to $ 1 million, according to the report.
He also added that the figures for millionaires were in US dollars, and the global study used the IMF forecast of the exchange rate, which expects wage increases to increase 11.4 percent to 86.3 cent in the US by 2023.
"It doubles about the expected growth of average fortune in Canada, compared to what we would see if the calculation was made in Canadian dollars," he said.
Even with increasing prosperity among Canadians, Credit Suisse warns that the economy is facing some challenges and the prospect is "somewhat uncertain."
"Approval is not obtained for new oil pipelines, which contributes to an oil supply in the United States Midwest. This has forced the price of oil from Canada's tar sands far below world prices."
"Trade frictions have become serious, with The United States continues punitive tariffs on Canadian timber, steel and aluminum, despite reaching a preliminary free trade agreement with Canada and Mexico to replace NAFTA. "
It was widely expected that metal tariffs imposed by the US and Canada in June and July respectively would be lifted after a new trade agreement was agreed before October 1st, but it has not happened yet.
Canada vs The United States
The Riksbank report also gave a snapshot of how wealth has grown for Canadians for 18 years from 2000 to the present.
The Canadian per adult in Canada grew on average by 5.4 percent, with a slight dip in the global financial crisis in 2008-09, similar to other developed countries.
Meanwhile, average wealth per adult in 2018 was $ 288,260, almost 30 percent lower than in the United States
However, wealth in the country was more evenly distributed compared to the United States. The median value per Adult in Canada was $ 106 340, compared to $ 61 670 in the United States
Canada also had both a smaller percentage of people with less than $ 10,000 and a greater proportion of those with over $ 100,000 compared to the United States
Sam Easily speaking, the country's 1.3 million millionaires accounted for three percent of the world's top one percent holders of wealth.