The year 2020 was a particularly difficult one for economic and political forecasting. Throughout the year we had to try to predict the course of the coronavirus (Covid‑19) pandemic in order to generate our forecasts. In retrospect, none of our regional and few of our country-level forecasts have changed since June, showing that we rightly predicted many of their underlying drivers.

The US economic rebound was strong in July-September

We correctly assessed the economic drivers of US GDP contraction early on. We also rightly predicted that the impact of the pandemic on the US economy would be lighter than elsewhere in the world, and that the coronavirus-induced recession would not be followed by a financial crisis. However, GDP data in July-September proved more positive than we expected. An unexpectedly robust recovery took place in these months, boosted by a sharp rebound in consumer spending (which we do not expect to last). On the political front, our US election call—that the Democratic nominee, Joe Biden, would be elected as president, but not by a landslide—proved to be accurate.

Muted unemployment and inflation cause surprise in Europe

In Europe, we rightly expected that the impact of the crisis would be much greater than that of the global financial crisis, and identified early on that tourism-dependent economies such as Spain would be hit the hardest. Our view that demand-side effects would prove more severe and long-lasting than supply-side ones was also correct. In retrospect, three trends were harder to predict. First, unemployment remains contained as a result of furlough schemes. Second, the hit to household incomes is smaller than expected. Third, inflation remains muted, despite coronavirus-induced supply shocks. However, we accurately forecast that the European Central Bank (ECB) would do whatever it took to maintain the financial system, averting risks of sovereign debt crises despite a spike in public debt ratios.

Supply-chain disruptions have actually boosted China’s exports

Our China forecasts have not changed much since April—we have long expected that real GDP would grow by slightly less than 2% in 2020. That global supply-chain disruptions have actually boosted China’s exports, as the Chinese economy was hit earlier and recovered faster than others, proved to be more surprising. It was also unexpected that China’s commodities imports would reach record-high levels; this was due to stockpiling, suggesting that commodities exporters to China may see demand soften in 2021 as stocks are unwound. In the fiscal sphere, we rightly predicted that the Chinese government would not unveil a large stimulus package owing to concerns about the high levels of indebtedness of state-owned enterprises and local governments.

No broad unifying theme across Asia

Elsewhere in Asia, we rightly forecast which Asian economies would contract and which would not early on. These accurate forecasts lay on our early expectation that Asian countries would broadly get their coronavirus response right (with India being a notable exception), exhibiting high levels of population compliance and drawing on their experience from severe acute respiratory syndrome (SARS); overall, this put the region in a better position than others. Unexpectedly, there is no unifying regional theme that explains why some Asian countries, such as Bangladesh, Vietnam and Myanmar, are proving particularly resilient.

Latin America’s external sector has held up surprisingly well

We were pessimistic about Latin America’s prospects early on, and rightly so; the region is among the worst hit in the world from both an economic and a public health standpoint. In many countries the resilience of the external sector has surprised us. This reflects high levels of support from multilateral institutions, strong Chinese demand for commodities exports and the fact that remittances inflows have also held up well against all odds. In the fiscal and debt spheres, we rightly predicted that Brazil would unveil a large fiscal stimulus package, and accurately forecast which countries would experience sovereign defaults (Argentina and Ecuador).

Agricultural economies have fared comparatively well in Sub-Saharan Africa

In the Middle East, we accurately expected that the region’s outlook would depend on two factors: oil prices (with commodities producers being hit hard despite generous fiscal packages) and tourism (with tourism-dependent countries experiencing a tough situation amid travel restrictions). In Sub-Saharan Africa, our view that 2020 would not be the trickiest year on the public debt front turned out to be correct (sovereign defaults will take place in the medium term). Surprisingly, some economies have been comparatively spared by the global recession; this is due to their dependence on agriculture, rather than on industry or services. However, our expectation that many countries would only impose short lockdowns given the high level of informal employment and the absence of safety nets was right.