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The Connector Podcast - We Need Wizards, Not Prophets: A Conversation with Philippe Gijsels
What happens when the global economy's tectonic plates start moving in different directions after decades of synchronised movement? In this fascinating conversation, Philippe Gijsels, Chief Strategy Officer of BNP Paribas Fortis and co-author of "The World Economy in Five Trends," unravels the complex forces reshaping our economic landscape.
Gijsels introduces us to "multi-globalisation" – not the end of globalisation but its fragmentation into distinct economic blocks moving at different speeds. This shift explains the increased market volatility we're experiencing as these economic plates collide, creating dramatic swings in equity markets and currencies. While climate change, geopolitical tensions, and ageing populations in developed nations create inflationary pressures, Gijssels highlights demographics as perhaps the most underestimated force. Africa's projected population explosion from today's 1 billion to 4 billion by 2100 will profoundly reshape global economic dynamics for generations.
Despite these challenges, Gijssels maintains a refreshingly optimistic outlook. He positions innovation, particularly artificial intelligence, as our potential salvation, comparing the AI revolution to humanity's discovery of fire or invention of the wheel. Drawing parallels with Neil Howe's "Fourth Turning" theory, Gijsels suggests we're in a cyclical period of disruption that occurs roughly every 80 years, similar to the era preceding World War II. Yet history shows these periods eventually give way to rebuilding phases led by new generations, what he affectionately calls "young wizards" rather than prophets, who have unprecedented opportunities to create a better world.
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Koen Vanderhoydonk
koen.vanderhoydonk@jointheconnector.com
#FinTech #RegTech #Scaleup #WealthTech
Welcome to the Connector Podcast, an ongoing conversation connecting fintechs, banks and regulators worldwide. Join CEO and founder Cohen van der Hooydonk as you learn more about the latest available trends and solutions in the markets.
Speaker 2:Welcome to another Connector Podcast, and today I've got with me Philipp Gijssels, who is the Chief Strategy Officer of BNP Pario Fortis, a big bank here in Belgium. Philipp, can you introduce yourself?
Speaker 3:Certainly. Thank you, koen, for having me. I'm Philipp Gijssels. I'm 55 years old. I've been working for this bank and the predecessors for about 30 years now, so I've not really worked for anybody else before. If you do that in London or New York or Hong Kong, they think there is something definitely wrong with you, but in Belgium we get away with it. I've studied commercial engineering, I have a CFA and I've been in the market since I was about 12 years old.
Speaker 2:And you also write books. You're an author as well.
Speaker 3:Well books is one for the moment, the World Economy in Five Trends that I wrote together with my partner in crime, kunde Leus. But there's a spoiler alert working on a couple of other ones One on the stock market again, and then one novel, probably a financial thriller.
Speaker 2:Yeah Well, I had the pleasure and joy to get some of the glimpse on the book, and what I found out is that you mentioned a lot wizards are not prophets in today's world, and earlier in the preparation you said that you've been writing a long time on this book. However, it's something super relevant, so can you enlighten us a little bit on that statement?
Speaker 3:Well, indeed it's a book. Why we have written the book, koen and I, and I must admit that Koen has worked way longer on the book than I did. They always joke I worked three years and you've only worked three months on it, which is not too far from the truth, but the fact is also that I've used a lot of material that I've been using over the last 20, 30 odd years. But why the idea about the book? Well, we thought that the world was profoundly changing, that we are moving in a world where and therefore the book is very timely a book where you would have a lot of geopolitical uncertainties, worries, volatility, big moves in markets and so on and so forth, and especially and that's one of our main conclusions that we draw, also immediately at the beginning of the book, in the preface, where we indeed say this will be a world where inflation and interest rates and commodity prices will be struct, world where inflation and interest rates and commodity prices will be structurally higher. And our book is an optimistic book, we think, because we see a lot of challenges, clearly, but we also see a lot of opportunities, and therefore because it's also written a little bit for the younger generation, which I always call the wizards and I cannot say witches, because that has a bad connotation.
Speaker 3:I always say because otherwise some of the ladies get angry, my daughter in particular. So that's the idea. But what I always say is look, we have a lot of challenges, but we don't need profits. We don't need people who come and tell us we're all going to die, the world is going to end. That's not going to help us. We need people who can tackle the problems, who can build the smart grid. They can build the batteries of the future, and so on. And then we look to the younger generation. I have two young wizards, a wizard and a lady wizard, at my place. My son is 21, my daughter is 19 years old.
Speaker 3:So, that's the future and in that way it's an optimistic book in a way.
Speaker 2:In the book you also describe five major trends that are reshaping the global economy. Could you maybe tell us a little bit more about those trends and then maybe focus a little bit more on the one that you think is most underestimated at the moment?
Speaker 3:Yeah. So the five are climate change, innovation, that multi-globalization, and then demographics. And then we talk about longevity and and then getting to 100 year life and stuff like that. And I think climate, yeah, that's very much the picture, even though with trump, maybe a little bit less than a couple of years ago. Innovation, yeah, with everything that's AI, that's clearly in the picture. That, yeah, it's all over the place. So nobody is doubting that that's on a government level, but also on a worldwide level is probably an issue. Multi-globalization yeah, we just heard Donald Trump making some crazy comments only five minutes before we started recording, so nobody is doubting that trend. So the one that's maybe not a lot in the picture is demographics, and that's also a bit strange in the way that I often say the hand that rocks the cradle controls the world.
Speaker 3:Demographics are hugely important and we will see quite a bit of them. Europe is aging, us is aging a little bit less fast, I would say, but china's aging as well. So the working population in china is declining very rapidly, so that will mean that they will have way more or way less growth than they used to have. India is probably better positioned, and the continent, of course and you know where I'm going with this the continent which will still see massive population growth will be Africa. Today, africa has about 1 billion people.
Speaker 3:In 2050, they will have 2 billion people and in 2100, they will have 4 billion people. So that's the only place in the world. All the rest will be in decline by then. So that will also once again create massive opportunities but also challenges for Europe and everything. So that's interesting and I think demographics we have the economics very often the dismal science. It's extremely hard to predict, but within economics, I think demographics is the thing that you can have more or less a view on Because, yeah, the working population in 20 years' time, people are already born today, so it gives you the opportunity to look ahead a little bit better than in other disciplines.
Speaker 2:That's probably more predictable in its own right.
Speaker 3:Absolutely.
Speaker 2:You also talk about multi-globalization and I'm wondering. You name it as a new paradigm, but how does that differ from de-globalization that we sometimes hear about?
Speaker 3:Yeah, To be honest, it's a term that Kuhn coined and that he talked about a lot, and the difference between the two is, in fact deglobalization means less globalization, by definition, or hardly any globalization at all, maybe. And multiglobalization means still globalization, but in a totally different way than we got to use over the last 20, 30 years, or effectively after the Second World War, probably. And multiglobalization means that you will still globalize, but you will globalize around different blocks. So we have moved from a world where the United States was the epicenter we had one world power that was the United States after the Berlin Wall and the collapse of the Soviet Union, so the United States would be policing the entire world, and then there would be something that we could call a Pax Americana, which is similar to the Pax Romana the first century before until more or less the first century after Christ, and that will no longer be the case, because all of a sudden you have a new world power coming up, which is China. You still have Russia, which is not an economic power, but it's still a military power. Then you have a Europe that should really speak with one voice, but which is extremely difficult today. It's still very fragmented. You have India, you have the new global south, so you have all these different blocks, and that will mean also a very big impact on the world economy, because I think we can no longer speak about one world economy as in one big cycle.
Speaker 3:Five to 10 years ago, everything would go into recession, everything would go into expansion together. Today, maybe for the first time in a very long time, the European economy is growing faster maybe than the US one. China has balanced its recession. They have clearly distinct problems, but it's not so important. Balance sheet recession they have clearly distinct problems, but it's not so important the total reasoning behind that, but it's important that also the chinese block will do something else than the other two.
Speaker 3:And then japan is something totally different, because there you have inflation, their inflation, interest rates are going up. So I always compare this a little bit with tonic plates and they moved all in the same direction, at the same speed, and now they move all in a different direction, at a different speed. It's no longer one global economy and when these, these tectonic plates, collide, you will see big movements in markets. You see equity markets go up 20 percent and then go down 20 percent. You see the euro move. You see interest rates move. So basically this is a totally different world. Living, working, investing in a multi-globalized world is something totally different than we used to.
Speaker 2:More complex. Well, if you take the analogy of tectonic plates, they make mountains, but they also make oceans. So what I liked a lot about what you're saying in your book, it's that innovation is a way out for recession. And since we have a very strong financial and fintech audience, can you explain a little bit more, because that sounds like music to our ears.
Speaker 3:Yeah, I'm a big fan Also in the fintech revolution. I think there are very exciting things happening on the technology front, also in AI and quantum and others. And you asked me about which chapter or which big trend was maybe the less well-known, and then I said demographics. But if I take the five, which one is the hot out? Well, that's clearly innovation, because all the other trends are clearly inflationary and and also, uh, will drive interest rates higher. But innovation is, of course, the potential to be deflationary, to be a counterweight against the other ones, and in that way, if we talk about young wizards and we talk about hope and we talk about positive things, well, probably this is the most positive chapter in the entire book.
Speaker 3:Of course, we all know there are challenges. There are challenges to AI, there are challenges to the regulation. Maybe the computers or the bots are going to kill us or take over our jobs or whatever. I do not believe that necessarily, but there are some question marks to this. But, all in all, this is the most interesting chapter because that can be the counterweight against the other four and maybe, when it's strong enough, well, some of the projections that we make on inflation and so on will maybe not be neutralized. So that's a positive thing.
Speaker 3:And I think that AI is hugely important.
Speaker 3:You know this, and your audience probably as well, that we have a big boom in the Magnificent Seven, that the Nasdaq went through the roof, then it fell down a bit, but now it's back up again.
Speaker 3:But basically, the same valuation of some of these stocks are maybe elevated, which is probably true, but on the other hand, I think AI we can put that side to side with the invention of fire or the wheel or agriculture. So I think in 20 years time we will look back at this moment and then AI and everything that's connected to it with quantum and so on, everybody will say this is maybe a new age that is starting, like the fire age or the age of iron or copper or bronze or whatever. I think this is a totally new age that has started and which IT already started, of course, 2000s or before. But this is a totally new age that has started and which it already started, of course, 2000s or before. But this is real accelerator and I think, from an investment point of view, I think it would be a big mistake to not be somehow invested in these things, because then I think you you're at the risk that you miss some out on something very, very important well, you mentioned change and evolution.
Speaker 2:Um, you also said, I think, in the forward, that you um drawn a lot of your, your mustard, if I may say, from the fourth turning another book which, uh, which goes about stages, four stages, and the last one is a crisis. And you say, I guess, is that where we're into at the moment is? Is that the statement, or or am I wrong?
Speaker 3:that's it. So first of all, we draw about 100 or 150 books. They always say if you steal from one person you can go to jail. If you steal from 150 people, it's like research. So we did quite a bit of research in the book.
Speaker 3:But maybe the most prominent book that we mentioned is indeed the Four Turnings here by Neil Howe. I'm very happy that when you listen to serious podcasts in the United States, Neil Howe is a very regular guest it's talked about. So I'm even more convinced today than I was a year ago that we're indeed in a fourth turning, and a fourth turning indeed, like you said, is a period of geopolitical uncertainty, extremist parties getting to power, the center becoming smaller and less powerful, big deficits, inflation, higher interest rates, all the things that we have mentioned. And I always say our book is a very positive book, but the fourth turning is not necessarily a positive book. Neil Howe is an historian, so he draws comparisons with the previous four turnings, and the previous one was the Second World War, the one before that was the American Civil War. And then he goes back to the old continent, to the United Kingdom, and then you go to the War of the Roses, you go to the Glorious Revolution and stuff like that. But the idea of a four turning is that four turnings together are always 80 years, so one turning lasts about 20 years and the idea behind that it's indeed, like you said, generational normally is a long life. So after the Second World War, there is a lot of destruction, a lot of horror, a lot of death, and then people say, hey, we're never, ever going to do that again and you start to build europe and united nations and the nato and the imf and all these things and then, of course, unfortunately, after 80 years time, all the people who have lived through the previous catastrophe, they're all old, aged or dead and basically the cycle starts again and that's where we are today.
Speaker 3:So so in my mind, the election of Donald Trump was not a big surprise either, because in the fourth turning typically sitting presidents, sitting governments, sitting parties of whatever color, shape or form they are they typically lose the elections.
Speaker 3:So that's an optimistic book because it tells us that we're in a totally difficult environment for some time to come.
Speaker 3:I always say you do not read that book when you go on holiday at the swimming pool, you do not read it under the Christmas tree. I always say Halloween is a good period to read that book. But if you read it and there's also 400 or 500 pages or something it's not optimistic but in a way, if you read it and you look at the world, you understand it better. And that's what we try to do for our clients as well to try to say everything that Donald Trump does and what we see in terms of wars and conflicts. It looks totally random, but it is not so random and this book really helps you to bring some structure, some logic in the randomness, and therefore it helps to have one positive point on that, because even Neil Howe has positive points. After a fourth turning, the first turning emerges again and then we come to the young wizards, the new generation that really rebuilt the world, and let's hope that they will rebuild it in a better way than we did.
Speaker 2:Philippe, I want to take you back to an earlier point that you made about multi globalization. How is the effect of multi-globalization then, on the fourth turning? Does that mean we all go in different speed or are we all aligning up to a pinnacle moment being the new high?
Speaker 3:well, that's a very good question and maybe we can turn it around a bit. I think that the multi-globalization is more a consequence of the foreturning. So you have moments in time where people work together, build institutions to work together and so on, and then then people start to redraw on their own church tower and they start to redraw to their own tribe, and that's exactly what's happening and that fragments the world. And because the world fragments, it starts to rebuild around these blocks. And that's what the multiglobalization is and what I talked about, the tectonic plates. That's, in a way, also a consequence of this fragmentation.
Speaker 3:But the fourth turning, the generational thing, and it's it's scary because if you read that book um by by neil howe and you see, you compare these periods, that you see that we see big similarities with what you see today, but what we saw already five times in the past as well. So there's, like Mark Twain said, history does not repeat itself, but it often rhymes. You hear the rhyme. It's a very beautiful Shakespearean rhyme that you hear and I've been in markets since I was 12 years old I'm 55 now.
Speaker 3:The market since I was 12 years old, I'm 55 now. So in 1982, I was 12 years old. That was the moment that inflation was sky high, interest rates were sky high and for the entire period from 82 onwards until COVID, basically interest rates and inflation came down. So it's for a lot of people the younger people, but even people of my age to imagine a world where inflation goes higher and where interest rates go higher because we have lived through a big decline for 45 years, almost Like that. So what you have not experienced yourself in markets you have to find in history books, and what Neil Howe has is a very interesting history book and if we have had some added value to that, we've taken the idea out of the history book and brought it to the markets to get an understanding.
Speaker 2:Philippe, we're almost at the end of our podcast here and I appreciate that you said this is a positive book. It's a positive message to the world, a message of change and possibilities to change. So what would be the message that you want to convey to the younger generation?
Speaker 3:Well, I think it's indeed a message of hope, in the sense that the challenges that we face are huge and it's our generation I'm Gen X but also the baby boomers and the ones before that that have probably created this world, and there is a lot of work to do. But I also think that the opportunities have never been so big in terms of investments, in terms of opportunities, in terms of access to information. If you want to learn, you can have books, you can have everything in ChatGPT. So I think these are extremely exciting times, but this is also a world that is changing. Extremely exciting times, but this is also a world that is changing. This is a world at the crossroads.
Speaker 3:That's that's indeed one of the main themes of a book as well and one of the reasons, like I said, why we've written the book. So there are a lot of challenges, but this will be extremely exciting. And, yeah, um, I I do not want to be young again because I'm happy with my life, like, like it is. But, but. But for younger people, there are so many opportunities, but they have to grab them. They will not be handed on a platter or on a plate or silver plate. They have to grab them themselves. But for those who are willing to go the extra mile, I think these are the most exciting times in the history of mankind.
Speaker 2:Well, thank you very much and if you allow me, then I like to stop this podcast here on this high note, because it's a very strong message to all of us, to our listeners. So, Philippe, thank you very much for your participation.
Speaker 3:Thank you for having me.
Speaker 2:You're welcome. Thank you also to the audience and please stay tuned on this podcast for more news from the financial industry. Thank you so much.
Speaker 1:Thanks for listening audience and please stay tuned on this podcast for more news from the financial industry. Thank you so much.