The financial wealth of Saudi Arabia grew by a Compound Annual Growth Rate (CAGR) of 4.1 percent from 2015 to reach $1 trillion last year, according to a new report by Boston Consulting Group (BCG).
The report titled ‘Global Wealth 2021: When Clients Take the Lead’ further reveals that 84 percent of this growth is investable wealth, as the Kingdom’s market show resilience in the face of the protracted COVID-19.
Despite the pandemic’s enduring financial impact, global prosperity and wealth grew significantly throughout the crisis and are likely to continue to expand over the next five years, in line with the emerging economic recovery.
“Saudi Arabia’s growth of wealth has proven to be robust, springing back from challenges presented by the COVID-19 pandemic. The Kingdom’s Vision 2030 has been a driving force to increasing economic productivity, which also is allowing Saudis to participate in an ever-more-global economy which has enabled growth in wealth despite the many economic disruptions that have occurred in recent times.”
Saudi Arabia which represented 45 percent of the Gulf Cooperation Council’s (GCC) financial wealth in 2020, is projected to witness a growth of 4.2 percent CAGR to reach $1.2 trillion by 2025. Meanwhile, the region’s financial wealth is forecast to reach $2.7 trillion in five years from $2.2 trillion in 2020.
The onshore asset allocation shows that currency and deposits accounted for the largest proportion of assets last year. The allocation of onshore assets is set to change slightly by 2025, with equities and investment funds expected to take the larger share of onshore assets amounting to 45 percent of the overall onshore asset class in the country.
Further, the BCG report shows that Saudi Arabia’s changing landscape of the wealthy in the coming years, with the rise of the next-generation high-net-worth clients. Individuals between 20 and 50 years of age have longer investment horizons, with a greater appetite for risk, and a desire to use their wealth to create positive societal impact as well as earn solid returns. But many wealth managers are not yet ready to serve these new clients.
“Greater economic attainment has enlarged the ranks of the Kingdom’s wealthy. Today there is more wealth in more hands, and as the demographics of wealth shift, so will the needs and expectations of clients. Local wealth managers will have to tailor their offerings more to either local needs or younger wealth segments,” Mr.Bosca stated.