Philippe Gijsels: We need wizards, not prophets

Apr 24, 2025

Philippe Gijsels does not paint a cheerful picture of the world. Last year, the chief strategist at BNP Paribas Fortis wrote the book De Nieuwe Wereldeconomie (The New World Economy) together with Koen de Leus, chief economist at BNP Paribas Fortis. Gijsels is a notorious book collector. It is therefore no surprise that more than a hundred books are reviewed in ‘De Nieuwe Wereldeconomie’.

According to him, an important work for understanding the current times is ‘The Fourth Turning is Here’ by Neil Howe. Unlike ‘De Nieuwe Wereldeconomie’, which is optimistic and identifies masses of (investment) opportunities in today's enormously complex and challenging world, Howe's book is not one that you should read on a sunny day on the beach, according to Gijsels. ‘It's more for Halloween.’

The political landscape seems to be changing on an almost daily basis. Isn't your book from last year now obsolete?

'No. In fact, I don't feel we would need to rewrite a single word. The phenomena we see today – complex international relations, economic uncertainty, lack of trust – are all discussed in our book. There is a lot of finger-pointing at Donald Trump, who is seen as a disruptive factor. That is probably the case, but Trump's election itself came as no surprise to me. It fits perfectly into the scenario we describe. I already thought so last year. I still have to collect a lot of bottles from bets I won by predicting his victory. And not just Trump himself, by the way, I also predicted the majority in the House of Representatives and the Senate.'

Isn't this a worrying situation?

'Of course it's worrying. We are living in extremely difficult times. It is a period characterised by high debt and high inflation, which in turn are accompanied by high interest rates. Together with the ageing population and climate change we are facing, the problems are enormous.

That's not all. International solidarity is hard to find. It is a logical consequence of the fact that the people who lived through the previous period of great chaos, spanning both the First and Second World Wars, are now either very old or have died.

That period of chaos culminated in initiatives such as the United Nations, the World Trade Organisation, the European Union, the IMF, you name it. Today, they are all under pressure.'

 

Trump is exactly the kick in the pants that other countries needed to bring them closer together.

 

Is that because of Trump?

'That's not just because of Trump. The ‘America first’ policy of the United States doesn't help, of course, but it fits in with a picture we see in other countries too. In the Netherlands, France, Belgium, Italy, you name it, extreme parties are dominating. The centre is shrinking and can't pursue the policies that should be pursued.

People are aware of this, but there is a lack of support for such policies. This fits in with the current climate of political chaos. Incumbent governments are struggling everywhere. In the United Kingdom, the Conservative government is being replaced by a social democratic one. In Germany, the opposite is happening.

The situation in the United States is similar. Barack Obama was the last president to be re-elected. Since then, we have had Trump, Joe Biden and now Trump again. If he fails to tackle tangible problems such as high inflation, there is a very good chance that another party will be in power in four years' time. It is even possible that he will lose his majority in next year's midterm elections.'

You talk about political chaos. But in recent times, cooperation between many Western countries – the coalition of the willing – has taken on new forms. What do you think about that?

'It is a logical consequence of the unpredictability of Trump's policies. It may sound strange, but it is conceivable that his role is positive. His behaviour is actually bringing other countries closer together. Trump is exactly the kick in the pants that other countries needed to come closer together. That is certainly true within Europe.

But it's still early days. Mutual distrust between countries remains high. We also need to look at the role of China and Russia. The latter may not be an economic superpower, but it is a military superpower, and that plays an important role in the current climate, with the possibility of violent wars.'

What can governments do now that they are increasingly reliant on themselves when it comes to economic policy?

'My attitude has changed over time. When I was studying some thirty years ago, I was a staunch supporter of Reaganomics and Adam Smith's invisible hand. Governments were the problem and should interfere as little as possible in the markets.

I now take a different view. The free market naturally creates a balance, but it is not necessarily the balance that is most desirable from a social perspective. In fact, it is likely that this balance is not the most desirable.

Take the Dutch support for ASML to ensure that its headquarters remain in the Netherlands. If you had asked me thirty years ago, I would have said that this was the last thing governments should be involved in.

But times have changed. All countries are pursuing a guiding industrial policy. The Netherlands would be crazy not to follow suit. In a period of geopolitical uncertainty, it is important to support companies in your own country.'

What does this mean for central bank policy?

'In the globalising world of the 1990s, the monetary policies of the major economic blocs followed a similar trend. If interest rates were lowered in the United States, they were also lowered in Europe. It might happen a little earlier or a little later, and in slightly smaller or larger steps, but the trend remained the same for decades.

There is now a good chance that the United States and Europe will act very differently. The consensus was that the United States would grow more strongly than Europe. In recent weeks, that picture has been changing, and who knows how it will turn out. In such a situation, it makes sense for the Fed and the ECB to pursue different policies.

Look at China. That country is facing what we call a ‘balance sheet recession’. Many Chinese have invested their money in real estate, which has now lost value. They are keeping their money in their pockets and saving enormously. In Japan and Europe, we saw in the late 1980s that interest rate cuts do not work. Stimulus policies will therefore have to be implemented. But it is clear that China is in a completely different cycle than the US and Europe.

The situation in Japan is different again. There, interest rates are rising. You have to see this as large tectonic plates that in the past moved harmoniously in the same direction. That is no longer the case. There will be a collision. It will cause great volatility.'

 

It will no longer be possible to invest in regional funds. It will increasingly be about the performance of individual countries.

 

And that at a time when the market valuations of the largest companies are enormous.

'Exactly. That could cause problems. It doesn't have to, though. Take Nvidia, an extreme case. A valuation of forty times its turnover seems absurd, but if the company is able to double its turnover in the next three years, which is certainly possible, then you're talking about valuations of twenty, ten and five times its turnover. The latter suddenly sounds much more realistic.

But it remains a cause for concern, of course. There are numerous comparisons with the internet bubble around 2000 and even more so with the US stock market crash of 1929. What we saw then was that a downward revaluation of the largest companies was followed by revaluations elsewhere, causing the stock markets to collapse. That is not the case yet. In the United States, the Nasdaq is falling, while stock markets in Europe are rising. That could change and a collapse is possible, but it doesn't have to happen.'

What should investors do?

'The situation with the tectonic plates means that it will no longer be possible to invest in regional funds. It is increasingly about the performance of individual countries. Take the situation in Latin America. You may disagree with President Javier Milei's policies in Argentina, but thanks to his successful tackling of inflation and other stock market-friendly measures, the Argentine stock market was the best performer in Latin America.

In Brazil, the opposite was done, which led to the worst performing stock market in the region. In such a situation, an MSCI Latin America or MSCI Emerging Markets index is of no use.'

Which sectors are attractive?

'I am extremely bullish on gold and have been for years. Last year, I predicted a gold price of $4,000 per ounce and was declared crazy. The price was $1,800 at the time and is now $3,000 and, I would say today, will rise well above $4,000. In a stagflationary environment, which I expect to prevail for the next five to ten years, gold is simply an obvious alternative. But silver may be even more attractive. In addition to being a monetary metal, it is also an industrial metal. I also see prices tripling or quadrupling in the coming years.

The outlook is also favourable for other industrial metals. Rising demand is accompanied by a supply that cannot change quickly. It takes decades to develop a mine. A small shortage in a market can cause prices to skyrocket. Just look at the oil market in the 1970s. A shortage of 3% to 5% quickly leads to prices doubling.'

How does that relate to innovation?

'Innovation is the big unknown. It can have major consequences. When young people buy our book, I often write as an assignment: ‘We need magicians, not prophets.’ We have no use for doomsayers. But innovation is the big unpredictable and positive factor. I always say that the more wrong I am about my prediction of rapidly rising commodity prices, the better it is for the world. After all, it means that a solution has been found to an existing problem. However, no one can predict this accurately. That is why we have to learn to deal with uncertainty.'

 

Philippe Gijsels Philippe Gijsels was trained as a commercial engineer and has been working in the banking sector for almost 30 years. He has been Chief Strategy Officer at BNP Paribas Fortis since 2013. He is a sought-after expert for international media and author of the book ‘The New World Economy in 5 Trends’, which was included in the Financial Times' summer reading list in 2024.

Attachments

• FI-2 - 2025 - RedInt Philippe Gijsels.pdf