How to surf the global megatrends without being ‘swallowed up by the tsunami’? Koen De Leus (BNP Paribas Fortis) wrote the book ‘The New World Economy in 5 Trends’, together with Philippe Gijsels, to help invest in times of superinflation, hyperinnovation and climate transition.
During the second edition of this year’s Captains of Retail, an exclusive VIP event for retail CEOs, Koen De Leus will take you on board. Annick van Overstraeten, CEO of Le Pain Quotidien, will also give you more insight into the ins and outs of the bakery chain.
You mention several structural trends in your book. Can you elaborate on these?
K.D.L.: “We identify five key trends:
- Climate Transition: This has been ongoing for a while, but new regulations and the need for sustainable practices are becoming more pressing.
- Aging Population: This is becoming a significant issue, especially in finding enough workers, which will inevitably lead to wage inflation.
- High Government Debt: We are seeing unprecedented levels of government debt in peacetime, which will have various implications.
- Deglobalization: We are moving towards a form of “multi-globalization,” where global trade is becoming more regionalized.
- Innovation and Productivity: While we’ve seen innovation, it hasn’t always translated into productivity gains. We believe that new exponential technologies will soon change this.”
How do these trends impact inflation and interest rates?
K.D.L.: “Four out of the five trends are inflationary. After 40 years of declining inflation and interest rates, we are now entering a period of structurally rising inflation and interest rates. This will pose significant challenges for business leaders, especially in financing debt, evaluating projects, and preparing for the climate transition.”
What specific challenges do you see for the retail sector?
K.D.L.: “The retail sector has already taken significant hits, especially with the recent inflation crisis affecting consumer behavior. Many retailers are operating on thin margins and have delayed investments. However, investing in innovation is crucial. Companies that fail to adopt new technologies, like artificial intelligence, risk being outcompeted by those that do.”
You also discuss the concept of “multi-globalization.” Can you explain what this means?
K.D.L.: “Multi-globalization refers to the shift from a single global market to multiple regional markets. This is partly due to the trade war between the US and China, which is likely to continue regardless of who is in power. Companies are increasingly looking to reshore production or find alternative suppliers closer to home. This does however creates opportunities in other in emerging markets that are stepping out of China’s shadow.”
What role do you see for government subsidies in supporting innovation and the climate transition?
K.D.L.: “Government subsidies will be essential, especially in the early stages of the climate transition. However, these subsidies need to be well-targeted to avoid waste. Ideally, we should move towards a common European financing mechanism, similar to the Next Generation EU fund, to support these initiatives.”
How do you see the political landscape affecting these economic trends?
K.D.L.: “Politically, we need to be cautious about rising government debt. Countries like Belgium need to be prepared for potential financial shocks. On a European level, we are becoming more aware of the need for strategic autonomy, especially in critical industries. This might mean more collaboration and less reliance on non-reciprocal global trade.”
In conclusion, what is your key message to business leaders?
K.D.L.: “Business leaders need to be proactive and prepared for a volatile environment. The next decade will be marked by significant changes and opportunities for those who are ready. Investing in innovation and adapting to new realities will be crucial for survival and success.”
Are you a retail CEO and keen to join us at the Captains of Retail, on 11 September in Antwerp?
