Editing IPCC:AR6/WGIII/Chapter-1 (section)

=== 1.3.3 Some Other Key Trends and Developments ===

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The COVID-19 pandemic profoundly impacted economy and human society, globally and within countries. As detailed in Cross-Chapter Box 1 in this chapter, some of its impacts will be long-lasting, permanent even, and there are also lessons relevant to climate change. The direct impact on emissions projected for rest of this decade are modest, but the necessity for economic recovery packages creates a central role for government-led investment, and may change the economic fundamentals involved for some years to come.

The COVID-19 aftermath consequently also changes the economic context for mitigation (Sections 15.2 and 15.4). Many traditional forms of economic analysis (expressed as general equilibrium) assume that available economic resources are fully employed, with limited scope for beneficial economic ‘multiplier effects’ of government-led investment. After COVID-19 however, no country is in this state. Very low interest rates amplify opportunities for large-scale investments which could bring ‘economic multiplier’ benefits, especially if they help to build the industries and infrastructures for further clean growth ( [[#Hepburn--2020|Hepburn et al. 2020]] ). However, the capability to mobilise low-interest finance varies markedly across countries and large public debts – including bringing some developing countries close to default – undermine both the political appetite and feasibility of large-scale clean investments. In practice the current orientation of COVID-19 recovery packages is very varied, pointing to a very mixed picture about whether or not countries are exploiting this opportunity (Cross-Chapter Box 1 in this chapter).

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