MOSCOW—When it comes to household wealth, it seems Russia has come full circle.
In the days of the Soviet Union, the country boasted that all its citizens shared the wealth equally, but a new report has found that a mere 20 years after the end of Communism, wealth disparity has soared with 35% of the country’s entire wealth now in the hands of just 110 people.
“Russia has the highest level of wealth inequality in the world, apart from small Caribbean nations with resident billionaires,” Credit Suisse’s annual global wealth report says.
The study discovered that in Russia there is one billionaire for every $11 billion in household wealth. In the rest of the world, there is one for every $170 billion.
According to Forbes, there are 110 billionaires in Russia out of a population of 143 million people. In 2000, there were just eight billionaires in the country. By contrast, there are currently 442 billionaires in the United States — which has just over twice Russia’s population — compared to 269 in 2000.
One of the authors of the report, Anthony Shorrocks of Global Economic Perspectives Ltd., said it was impossible to compare Russia’s wealth disparity to that of any place else.
“The situation in Russia has no parallel. If you look at how Russians have made their money and the sort of political ties that seem to be necessary to maintain it, there are just very few places where the situation is similar,” he said.
He said researchers arrived at the eye-popping figure by dividing the number of billionaires listed in Forbes into a composite estimation of Russia’s overall wealth as gathered from balance sheets, market capitalization data and other economic information published by Russia’s state statistics agency. Mr. Shorrocks said, however, that Russia’s wealth figures were not as clear as in other countries due to a lack of data on the value of non-financial assets, like real estate.
He also noted that the high percentage of wealth being held in such a small number of hands has remained at roughly the same level for years.
But the study showed — when weakening exchange rates are factored in — average wealth in Russia has been falling. In 2007, the average adult had around $14,000 when a dollar bought 25 rubles. But now that figure stands at just $11,900, with the exchange rate standing at just over 32 rubles to the dollar. At a constant exchange rate, average wealth has shown “no sign of growth,” since before the economic crisis in 2008, the report found.
Overall, 93.7% of Russia’s adult population has less than $10,000 in wealth; 5.6% has between $10,000 and $100,000; 0.6% has between $100,000 and $1 million; and 0.1% — or about 84,000 people –has over $1 million. In the U.S., 30.7% of the adult population has less than $10,000; 33% has between $10,000 and $100,000; 30.7% has between $100,000 and $1 million; and 5.5% — or 1.3 million people –has over $1 million.
Credit Suisse estimates that worldwide there are 98,700 “ultra-high net worth individuals,” or people worth $50 million or more. Almost half of them live in the United States. Russia is 11th on the list between India and Australia. Just 3,100 people have assets of over $500 million, the report said.
source: blogs WSJ