William De Vijlder (64) retired this autumn as the chief economist of BNP Paribas. In a farewell interview, he reflects on four decades of economic analysis. ‘Everything is even more interconnected than I once thought, which makes it incredibly fascinating.’
William De Vijlder
- Doctor in Economics (Ghent University)
- Began his career in 1987 at the research department of Generale Bank
- Has lectured at Ghent University since 1991
- Former chief investment officer at Fortis Investments and later BNP Paribas IP
- Appointed chief economist of BNP Paribas in 2014
De Vijlder served as the chief economist of the French banking giant BNP Paribas for ten years, following a career in asset management as chief investment officer and director of investment teams. Recently, looking ahead to his retirement in early 2026, he has become economic adviser to BNP Paribas’ top management.
‘My earlier career proved useful for my role as chief economist because it fostered reflexes that pure economists might not possess,’ he explains. ‘For instance, an awareness that reality is much more heterogeneous than the basic economic models of 20 or 30 years ago suggest. There can be significant differences between sectors or regions within a country, and the financial sphere can have a decisive impact on the real economy.’
Selective amnesia
On the eve of a potential Trump second term, investors are bracing for a world with increased protectionism and trade conflicts. This raises concerns among pessimists about highly turbulent times on the geopolitical and economic fronts. However, De Vijlder remains composed, pointing out that past decades have also seen politically charged periods, though we collectively tend to forget them.
‘When creating future scenarios, one must avoid being too selective in how the past is viewed. I think it is human nature to suffer from selective amnesia. Situations that were once highly significant tend to fade from memory,’ says the Flemish economist.
‘The United States is currently highly polarised. But the late 1960s were also extremely tense, following the assassinations of John F. Kennedy, Bobby Kennedy and Martin Luther King, and due to the Vietnam War. I recently watched a documentary about Bridge Over Troubled Water, the legendary 1970 song by Simon & Garfunkel. Paul Simon recalls that in certain parts of the US, they were simply unwelcome because of their outspoken views.’
‘A more financial example is the disinflation engineered by then-Fed Chairman Paul Volcker in the 1980s, which tamed inflation through aggressive interest rate hikes. Companies reliant on short-term financing suddenly faced interest rates skyrocketing from 10 percent to 20 percent, only to plummet again. That was intense.’
‘Or consider the immediate aftermath of the 1987 stock market crash. That was also a tumultuous period. I remember internal discussions about how many basis points to lower growth forecasts. The shock of the Fed’s interest rate hike in 1994 was similarly enormous.’
‘And yet, the period from the 1980s to the late 1990s is often summarised in just a few sentences: inflation was controlled, real interest rates fell, and the internet sparked a technological revolution with positive economic consequences. On top of that, geopolitically, the world experienced a new era, as posited in The End of History and the Last Man, the well-known book by Francis Fukuyama – which, incidentally, I have not read. There was a decade during which people naïvely believed we had achieved a global consensus model. Fukuyama was later ridiculed, but not at the time.’
‘My point is: when analysing the current state of the world, one must avoid portraying the past too rosily. I still recall a front page of Knack magazine from the 1980s with the headline, “What if a neutron bomb falls on Antwerp?” Geopolitical unrest is certainly not a recent phenomenon.’
From free trade to protectionism
Had De Vijlder foreseen the pendulum swing from free trade to protectionism?
‘Based on trade statistics, the world reached peak globalisation around 2010. Since then, there has been a long-term trend towards greater protectionism, involving all economic blocs, albeit more subtly than now,’ he says.
‘So, in that sense, the recent resurgence isn’t entirely surprising. We need to wait and see what trade policy under Trump will entail. Perhaps the announced high tariffs will be limited to a few specific products.’
‘What did surprise me, however, is the dramatic shift in how America views China. The US has transitioned to a “weaponisation of business”, using trade policy as a strategic weapon. Geopolitics now dominate economics.’
‘I’ve always found the impact of geopolitics on the financial world fascinating. In 1989, the Berlin Wall fell, and in 1990 we witnessed German reunification. I remember it as if it were yesterday: brokers and investment banks published optimistic reports about “The Peace Dividend,” as it was called then.’
‘Then, in 2001, there was widespread enthusiasm when China joined the World Trade Organisation. US President Bill Clinton was thrilled, and numerous asset management analyses focused on the immense potential: if every Chinese citizen bought this or that product, the opportunities for Western companies would be enormous.’
‘The question I now ponder often is: does the current trend of protectionism and power plays between major regional blocs represent a definitive direction for the world, or is it a pendulum swing that will eventually return towards free trade? If the latter is true, how far can the pendulum swing, and what forces will reverse its course?’
‘I was in secondary school when Jimmy Carter became US President and at university when Ronald Reagan was elected. The rise and fall of the neoliberal order by Gary Gerstle offers insights into how slow the shift towards free-market capitalism was. It took decades. This provides food for thought. If such dynamics are so slow, are we underestimating the repercussions of today’s reverse trend towards protectionism? Entire libraries have been written about its detrimental effects, not only on targeted countries but also on the imposing nation itself.’
The 2008 banking crisis
One of the most turbulent moments in De Vijlder’s career was, of course, the 2008-2009 financial crisis, during which the Belgian banking arm of his employer, Fortis, ultimately ended up in the hands of BNP Paribas.
De Vijlder, also a university professor, reflects analytically. ‘One thing I learned from that crisis is how little we economists understand about the undercurrents – the hidden trends in an economy and the delayed consequences of decisions.’
‘The Fed stopped raising interest rates in the late spring of 2006. That interest rate hike was one of the causes of the financial crisis. So the real problems as a result of that came with a great delay.’
‘A more recent example: Because both companies and households borrowed extensively at fixed interest rates, the Fed found it could only partially influence behaviour through rate hikes. They were effectively “immune,” meaning the monetary transmission mechanism didn’t function as expected.’
‘My hope is that, through big data and perhaps even AI, we can better map these undercurrents. Ah, it remains a fascinating world,’ he muses.
‘A second lesson concerns the interdependence of many economic actors. The reaction of one actor can stabilise the system or, unintentionally, exacerbate a crisis. Individual behaviour may seem logical at the micro level but can have highly undesirable macro-level consequences. We saw this during the financial crisis and later in the euro crisis.’
Looking ahead
De Vijlder isn’t fully retiring; he will continue working a few days a week as an adviser at BNP Paribas, giving him more freedom to focus on the topics that intrigue him most. What areas of the economic radar will he be watching most closely?
‘One very general question fascinates me. From climate measures to addressing ageing populations, society faces enormous challenges. But how will we finance all of this? I’m not even speaking specifically about governments, but more generally. The money can only partly come from banks, as they must meet certain capital requirements. The capital markets as a second channel? But if demand for money in the capital markets rises, supply will also need to increase.’
‘A second issue revolves around the perception many households have that their exposure to major global upheavals – climate change, AI, geopolitics – is greater than ever before. Whether this is actually true, I don’t know, but the sentiment is clearly present. One of the fascinating observations in Europe over the past twelve months is that consumer confidence has risen, yet the savings rate has also increased. This growing confidence hasn’t translated into higher consumption. How do we reconcile that?’
‘My theory is that this has to do with perceived uncertainty and a general feeling of “life is expensive.” While inflation has eased, prices haven’t fallen. Add to that the fact that essential expenditures take a larger bite out of household budgets. This may partly stem from peer group pressure – households want what their neighbours have – but also because certain fixed costs, like telecom subscriptions, genuinely weigh more heavily. In short, the average household wonders: are we well-prepared for the future?’