The high average wealth of people living in Monaco reflects:
Its tax haven status – people living in Monaco pay no income tax. This attracts wealthy people to move there and also promotes business formation in the country.
Offshore center – Monaco operates as an offshore center for the European wealth sector, which brings a large number of wealthy financiers to the country.
Its location on prime part of the French Riviera.
High proportion of multi-millionaires – approximately 2,200 of Monaco’s 40,000 residents are worth over US$10 million.
It is a hotspot for super-yacht owners and one of the most popular yacht docking spots in the Med.
High real estate prices – Monaco apartments are the most expensive in the world per square meter.
Snob appeal – Monaco is synonymous with wealth, luxury and fame.
Sources & Methodology:
How do we calculate average wealth? Source used include:
Income distribution stats in each country.
Stock exchange statistics in each country.
Residential property market statistics in each country.
Wealth data from our HNWI database.
GDP vs. Wealth
In our view, people focus too much on GDP and ignore wealth and income trends. GDP has a number of underlying issues/problems, including:
GDP counts items multiple times (for instance, if someone is paid $100 for a product/service and they then pay someone else that $100 for another product/service, then that adds $200 to a country’s GDP even though only $100 has been produced at the start). This is why many analysts prefer using export figures or GDP generated from primary sectors as a measure of financial health.
GDP ignores the efficiency of the local banking sector and the local stock market at retaining wealth in a country.
GDP disregards income levels in a country.
In certain countries, a large portion of GDP flows to the government and therefore has little impact on private wealth creation (example: Bahrain, Zimbabwe).
Wealth statistics, on the other hand, take all of these factors into account, which makes ‘per capita wealth’ a far better measure of the financial health of an economy than ‘per capita GDP’.
Income per capita is another good measure. However, it fails to take into account all the wealth held in local businesses, equity markets and property markets.
Problems facing W10 markets:
High pension and benefit obligations and high public healthcare costs.
Slowing per capita wealth growth.
Rising levels of racial and religious violence.
Rising inequality levels.
*New World Wealth is a global wealth intelligence and market research company. We provide customized services to: wealth managers, family offices, real estate professionals, migration platforms and fund managers.