The World Trade Organization (WTO) reported that the volume of world trade in products fell 5.3% in 2020.
That decline would be followed by 8% year-on-year growth in 2021, according to their forecasts.
Likeweise, the 2020 result is less than the 9.2% drop predicted in the previous WTO forecast in October 2020.
The better-than-expected performance towards the end of the year is partly explained by the announcement of new Covid-19 vaccines in November, which helped improve business and consumer confidence.
Likewise, the volume of world merchandise trade plummeted 15% year-on-year in the second quarter of 2020 (revised up from -17.3% in October) when countries around the world imposed closures and travel restrictions to limit the spread of Covid. -19.
But the blockages eased in the second half of the year as infection rates declined, allowing merchandise shipments to return to near 2019 levels for the fourth quarter.
The faster growth in trade and production in the second half of 2020 was supported by significant government policy interventions, including significant fiscal stimulus measures in the United States.
These measures boosted household income and supported continued spending on all goods, including imports.
Additionally, many businesses and households have adapted to changing circumstances and found innovative ways to maintain economic activity in the face of health-related mobility restrictions.
Effective management of the pandemic limited the scope of the economic downturn in China and other Asian economies, allowing them to continue importing. These actions helped shore up global demand and may have prevented an even bigger trade slump.
In nominal US dollar terms, trade fell even more dramatically than trade in volume terms in 2020.
The values of world merchandise exports fell 8% compared to the previous year, while commercial services income contracted 20%.
At the same time, trade in services was particularly affected by restrictions on international travel, which prevented the provision of services that required physical presence or face-to-face interaction.