Economic stimulus of climate action in developing countries: a framework for sustainable and pro-poor COVID-19 recovery

The COVID-19 pandemic has had a profoundly sudden and damaging impact on economies on a truly global scale. Developing countries and advanced economies are expected to experience diverging recovery pathways in the aftermath of the pandemic. An unprecedented level of stimulus finance is likely to help developed countries put their economies back on track to reach pre-crisis output levels already in 2021. Recoveries in developing countries will most likely lag behind, slowed by an inability to implement comprehensive containment and relief measures to avoid prolonging the health crisis, as well as limited capacity to engage in recovery measures funded by running a budget deficit. Despite short-term cuts in emissions due to reduced economic activity, the COVID-19 pandemic is increasingly reversing gains in climate action and poverty reduction in developing countries. This highlights the need for targeted green recovery measures and international support.