Overcrowded, dense cities wholly unsuited for remote work and an ingrained culture of government bureaucracy and interference could permanently hamper the region’s economic future, Andrew Isbester, finews.asia’s editor-at-large, writes.

The recent Capgemini World Wealth Report contained a few surprises, chief among them that the number of high net worth individuals (HNWIs) in North America grew faster last year than in Asia. And even more surprising, it wasn’t the first time, but the second year in a row.

In fact, the population of HNWIs in North America has grown more than it has in Asia since 2013.

Why is Asia not Creating More HNWIs?

What makes this all harder to explain is that Capgemini’s definition of Asia Pacific includes both China and India, each of which has a total population almost four times as large as that of the United States and Canada combined.

When you look at that and how GDP growth, for example, in China has outpaced that of the U.S. since 2000, while India has been all over the place, then perhaps everyone has been looking at this the wrong way around.  

Maybe the current generation of newly minted Asian billionaires are the anecdotes that don’t tell the whole story. And we should instead ask why the region has been so bad at creating new HNWIs.

GDP Reset

Although the report did attribute most of the gains in North America to the post-pandemic returns in tech stocks – Apple, Amazon, and Microsoft accounted for 53 percent of the S&P 500 total returns last year – they expect Asia Pacific’s structural advantages, which they characterize as a younger demographic and robust economic momentum, to help the region surpass North America again in future.

But shouldn’t we question this as well? On GDP, the pandemic seems to have prompted a hard reset, with North America and Europe expecting GDP growth akin to many countries in Asia – at least temporarily.

Demographics also look decidedly mixed. India is still on track to become the world’s most populous nation by 2027 even though population growth is slowing, while China seems to be on the verge of a crisis. Its population is growing at the slowest rate since the 1950s and greying at the same rate as many older developed economies while not having immigration as an economic vent. That may be controversial in countries with high immigration, but say what you will, it is a stabilizing factor economically.

Coping or Not

These structural advantages may also pale in significance in the future. China’s recent extension of pandemic border restrictions for another year and Japan’s protracted hand-wringing before the start of the summer Olympic Games are perpetuating an entrenched détente in which many citizens seem satisfied to remain in government-mandated mask-wearing limbos in cities and countries with low vaccination rates, harsh quarantines, no tourism and very limited business travel.

And if permanent remote work is in our post-pandemic future, then built-up Asian cities full of expensive skyscrapers and little room for suburbs may make the region wholly unsuitable for accelerated growth rates.