Wealth in Turkey grew the most in the world at 157% despite rising inflation, according to the rankings

Turkey came miles ahead of the rest of the world in an annual ranking of global wealth – a result that may be surprising, given the country’s high levels of inflation.

“Turkey stands out with a staggering increase of over 157% in wealth to grow between 2022 and 2023, leaving all other nations far behind,” Swiss bank UBS wrote in its Global Wealth Report 2024, using the local spelling for the name of the country.

The next highest countries in terms of average growth in wealth per adult were Russia and Qatar at nearly 20% and South Africa at just over 16%. In the US, median wealth per adult increased by nearly 2.5%.

Inflation in Turkey stands at around 72%, an attractive figure for the country’s 85 million inhabitants, many of whom have seen their purchasing power drop dramatically over the past few years. In the last five years, Turkish Lira has lost nearly 83% of its value against the dollar, and currency trading at 33 lira to the US dollar as of 09:07 am London time on Wednesday.

But for Turks who own assets such as houses, wealth has increased, as inflation increases the costs of these properties.

The UBS report defines net worth or “wealth” as “the value of financial assets plus real assets (mainly housing) owned by households, minus their debts.” In a call with reporters, some of the report’s authors broke down the relationship between inflation and wealth growth in Turkey.

“In some ways, the high rate of inflation also helps explain why wealth has grown so much more in local currency terms, at least [more] than in other countries, because it’s worth bearing in mind that wealth is measured in nominal terms,” ​​economist Samuel Adams at UBS Global Wealth Management told CNBC.

“If inflation is very high, what tends to happen is that if you have a real asset like housing, housing prices tend to rise in line with inflation, if not faster,” he said. “So those people with home ownership, or who own stocks, which also tend to perform quite well in those environments, they tend to see their wealth accumulate a little faster.

“Of course, that doesn’t mean everyone benefits to the same extent,” Adams added. “If you’re not in those assets, if your wage growth doesn’t keep pace with inflation, then, of course, it’s going to be quite negatively impacted.”

The report also noted the “currency effect,” which is what changes wealth growth the most—local currency growth figures for wealth are often significantly different from those in dollar terms.

“Türkiye’s already remarkable rise of over 63% in USD … more than doubles to nearly 158% in Turkish lira,” he said. Other examples in the report included Japan, which in dollar terms has seen less than 2% average growth in wealth to grow in US dollar terms between 2022-23, but in local currency this growth was 9%.

Estimating the countries’ average wealth growth between 2008 and 2023, “the most dramatic evolution has occurred in Turkey,” UBS wrote, “where average wealth per adult in this period has increased by 1,708% in local currency.”

UBS Global Wealth Management Chief Economist Paul Donovan noted that being asset rich does not necessarily mean being cash rich – in Turkey, it can actually be the opposite.

“In terms of living standards rather than wealth, it’s also important to remember that if you own a house, the value of your house has gone up, but your real salary can be negative at the same time. So you can you are … asset rich and cash poor,” Donovan said last week.

“This is certainly a possibility, where many of the stresses that have emerged in the Turkish economy over the past few years have been due to negative real incomes,” he added, “not necessarily what’s happening on the asset side.”