The number of Canadian millionaires will increase by more than half over the next five years: Credit Suisse

The number of millionaires in Canada will increase by more than half in the next five years, a growth rate higher than that of other developed countries such as the United States, according to a new wealth report released by the banking giant Credit Suisse .

Canada had 1.3 million millionaires in 2018, and this number is expected to increase by 54% to nearly two million by 2023, the World Wealth Report, 2018.

Canada ranks third – behind China and Russia – among the top 24 economies in terms of the highest percentage increase in the population of millionaires over the next five years. In comparison, the number of millionaires in the United States will increase by 18% to reach more than 20 million individuals during the same period.

The bank used its financial and non-financial assets such as homeownership and economic indicators such as GDP (gross domestic product) and inflation from the International Monetary Fund's latest Economic Prospects Database. (IMF) to establish its forecasts.

Wealth of the housing market

The high value of properties will continue to be a major factor in household wealth in Canada, despite the recent slowdown in the housing market, the report said.

"One of the assumptions behind the increase in the number of millionaires is that the real estate wealth of Canadians will continue to rise – no collapse of this market," said Jim Davies, author of the Study and professor of economics at Western University.

Data released by the Canadian Real Estate Association earlier this week showed that home sales fell nearly 9% in September from a year earlier. However, the national average price of a home sold last month increased 0.2% to just under $ 487,000 from the previous year.

Another reason for the expected large increase in the number of millionaires in Canada is that there are currently many people with a fortune of just under 1 million US dollars, said Davies.

"The expected increase in wealth over the next five years would put everyone in the group of millionaires at a wealth of more than three times the current average, if that happened today. " said Davies.

According to the report, more than 46% of Canadians have a wealth of between $ 100,000 and $ 1 million.

He also added that the figures for millionaires were expressed in US dollars and that the global study used the exchange rate provided by the IMF, which forecast an 11.4% increase in the loonie to 86.3 US cents. here 2023.

"This doubles the expected growth in average wealth in Canada, compared to what we would see if the calculation were made in Canadian dollars," he said.

Even with the increase in wealth of Canadians, Credit Suisse warns that the economy is facing challenges and that its outlook is "somewhat uncertain".

"Approval was not obtained for new oil pipelines, contributing to a glut of oil in the US Midwest, forcing the price of oil from Canada's oil sands well below the world price." , according to the report.

"Trade frictions have become serious, with the United States continuing to apply punitive tariffs on Canadian lumber, steel and aluminum, albeit with the exception of the United States. they entered into a provisional free trade agreement with Canada and Mexico to replace NAFTA. "

It was generally expected that the metal tariffs imposed by the United States and Canada in June and July, respectively, would be lifted after the conclusion of a new trade agreement by the October 1 deadline, but that has not been done yet.

Canada against the United States

The wealth report also provided insight into the growth in wealth of Canadians over the last 18 years, from 2000 to today.

Adult wealth in Canada grew at an average rate of 5.4%, with a slight dip in the global financial crisis of 2008-2009, along with other developed countries.

Meanwhile, the average wealth per adult in 2018 was $ 288,260, almost 30% less than that of the United States.

However, the country's wealth was better distributed than that of the United States. The median wealth per adult in Canada was $ 106,340 compared to $ 61,670 in the United States.

In Canada, the percentage of people earning less than $ 10,000 and the percentage of people over $ 100,000 were also lower than those in the United States.

Overall, 1.3 million millionaires in the country accounted for 3% of the top 1% of wealth holders in the world.