Book Review: The New World Economy in 5 Trends

Guide Evaluate: The New World Economy in 5 Trends: Investing in Times of Superinflation, Hyperinnovation and Climate Transition. 2024. Koen De Leus and Philippe Gijsels. Lannoo Press.

One sort of reader could also be searching for a sober evaluation of the economics of megatrends. One other could also be searching for one thing extra wide-ranging, humorous, and eclectic, replete with pointers towards funding alternatives. For each sorts of reader, The New World Economy in 5 Trends shall be a welcome discover. The e-book presents an interplay between its two authors, who’ve contrasting types that handle to come back collectively as a coherent entire.

Koen De Leus, chief economist at BNP Paribas Fortis in Belgium, and Philippe Gijsels, chief technique officer on the similar establishment, coauthored this e-book. De Leus is the diligent economist who approaches his matters with thorough data-driven evaluation, centered on figuring out the long run implications for the financial system of as we speak’s altering world.

Gijsels focuses on figuring out the funding implications of those financial modifications. Clearly a bookworm, Gijsels refers repeatedly to his huge studying. He has a weekly presentation of recent books on LinkedIn, “Over My Shoulder,” and his fashion of study can lead him in sudden and fascinating instructions.

At its core, the e-book examines 5 particular developments that the authors imagine can have the best impression on economies and investments between now and the center of this century. The developments highlighted are innovation and productiveness, local weather, multiglobalization, debt, and growing older.

Evaluation of developments or megatrends is nothing new. Be aware, for instance, that one thing comparable options within the CFA Institute curriculum for the Certificate in ESG Investing. What could also be new right here is the usage of such detailed financial evaluation to tell funding implications.

The part on growing older affords a very good instance of how the economist and the strategist work together. De Leus analyzes international demographic developments comprehensively, by age group, nation, and area. He appears to be like at developments within the dependency ratio, the ensuing “time bomb below the social safety system,” and impacts on rates of interest and inflation, in addition to doable cures obtainable to totally different nations.

Gijsels’s contribution to the chapter is extra eccentric. He “interviews” nineteenth century economists Thomas Malthus and David Ricardo. He cash new phrases like “seniorescence” and “transiteer,” and he refers to French fables. Out of those eclectic components, nevertheless, comes strong evaluation of funding alternatives — biotechnology, robotics, the expertise financial system, battery applied sciences, actual property, and extra.

Naturally, the authors stress that the concepts within the e-book “ought to under no circumstances be seen as funding recommendation. We’re merely offering you with a number of foundational ideas.”

The developments typically overlap. For instance, the part on growing older has an fascinating evaluation of the impact of demographics on innovation (“oldtimers don’t innovate”). Actual property comes into play in a number of sections, and the prospects for commodities are analyzed in each the local weather and multiglobalization sections.

The authors neatly summarize every of the 5 developments, first with “Ten factors to recollect” after which with “Ten to spend money on.” The solutions about the place or the right way to make investments are typically common in nature, suggesting the place to begin for additional evaluation somewhat than providing full-fledged funding proposals.

For instance, in relation to innovation and productiveness, there may be recommendation on the right way to cope with the AI growth and an assertion that “whoever owns knowledge has the ability and will get the earnings.” Within the part on local weather, we learn that “the vitality transition is without doubt one of the greatest funding alternatives ever. Don’t miss your likelihood.”

Of the 5 developments mentioned, multiglobalization would be the one with essentially the most novel remedy. On the one hand, there’s a research of phenomena akin to re-shoring and diversifying international provide chains. However, the authors present evaluation of how companies can turn into globalized, particularly “intermediate” companies akin to knowledge entry somewhat than “last” companies akin to accountancy.

The dimensions of digital companies exports is important, totaling €38 trillion globally in 2022, based on the authors (citing an Worldwide Financial Fund report). The ensuing funding alternatives are considerably unclear, however we’re suggested that “it will be unwise to not sit on the Chinese language desk from an funding perspective.” An analogous sentiment applies for “low-cost progress markets.”

A method that the e-book appears to be like forward to the long run is thru occasional simulated information experiences from the 2040s and 2050s. These supply a mix of unfavourable and optimistic predictions. For instance, one such report describes the dire state of the planet ensuing from local weather change and “previous authorities leaders’ procrastination.”

The part on globalization foresees a discount in international progress ensuing from better import restrictions, albeit this discount in progress will be reversed by extra open commerce insurance policies. On a extra optimistic observe, the authors predict enormous will increase in productiveness ensuing from innovation like AI and quantum computing. These experiences are additional examples of the e-book’s ever-varying construction. This selection, together with an interesting writing fashion (and even enticing typesetting), retains the reader’s curiosity on this quantity of greater than 400 pages.

For all of the e-book’s good qualities, it’s disappointing to search out errors and typos all through the textual content. These could end result from translation error — the e-book was initially printed in Dutch, whereas the model being reviewed is an English translation. Nonetheless, a extra thorough proofreading might need prevented errors akin to misspelling “rigthly” and “artifially”, complicated the World Well being Group and the World Commerce Group, and rewriting Mario Draghi’s famend phrase “no matter it takes” as “every part doable.”

Referring to a different title, Gijsels feedback, “The e-book does what any good e-book ought to do: It supplies insights and is a place to begin for evaluation and dialogue.” That is an apt remark about The New World Financial system in 5 Traits itself. Most of the e-book’s prognostications could finally fail to come back true, and absolutely developments not referred to right here will emerge within the a long time forward. Nonetheless, the e-book does an admirable job of trying by means of present developments to 1 doable future, thereby serving to its readers to “surf the waves” of change.