The year 2020 was dominated by the COVID-19 shock and the abrupt suspension of normal economic activity across much of the world. The IMF described the period as a “long and difficult ascent,” noting that after the Great Lockdown and the severe contraction of the second quarter, the global economy began to recover only tentatively as economies reopened in stages. The picture was not one of normal recovery, but of fragile stabilisation under extraordinary uncertainty.

In financial markets, the decisive story of 2020 was the scale of policy intervention. The IMF’s Global Financial Stability Report stated that unprecedented and timely policy responses helped avert a financial meltdown and maintain the flow of credit to the real economy. It also noted that, for the first time, many emerging-market central banks launched asset purchase programmes to support domestic financial conditions. At the same time, the IMF warned that vulnerabilities were rising, especially in the corporate and sovereign sectors, as firms took on more debt and governments widened deficits to cushion the crisis.

Asia entered the crisis earlier than most regions and also began recovering earlier, though at very different speeds. The IMF estimated that economic activity in Asia would contract by 2.2% in 2020, while ADB projected that developing Asia’s GDP would contract by 0.7% in 2020 before rebounding in 2021. The World Bank noted that only China and Vietnam followed a clear V-shaped recovery path in 2020, showing how uneven the region’s performance had already become even within a generally stronger Asian framework.

For Asia, 2020 demonstrated both vulnerability and resilience. The region was deeply exposed to the collapse in mobility, trade and confidence, yet parts of Asia also showed an earlier capacity to stabilise production, restore activity and benefit from the initial recovery in global goods demand. China’s recovery was specifically noted by the IMF as having surprised on the upside, but the wider regional and global message remained cautionary: the immediate crisis had been contained more successfully than many feared, but the underlying recovery was multispeed, policy-dependent and still highly exposed to setbacks.