HELSINKI, June 16 (Xinhua) -- The economy of Finland will contract by six percent this year, predicted the Finnish Ministry of Finance on Tuesday. The figure is slightly higher than the 5.5 percent forecast in April, but far lower than the range of 11 percent-15 percent predicted by several forecasters earlier this year.
At a press conference, the ministry said that lifting anti-COVID-19 restrictions from June will boost Finnish economic activity, especially in the services sector. The economy is projected to pick up at the end of 2020, and gross domestic product (GDP) is then estimated to grow by 2.5 percent in 2021 and by 1.7 percent in 2022. The ministry noted, however, that a major improvement in the outlook on export markets is required for the country's economy to recover.
The new projections are based on the assumption that there will be no second wave of COVID-19 in the country, said Mikko Spolander, director general at the Finance Ministry.
According to the ministry, the deficit in the public economy will rise to 8 percent and the ratio of general government debt to GDP will rise to approximately 71 percent. Spolander told the media that recovery measures "will carry Finland over the crisis", but decisions should be taken soon on how to balance public finances in the long run. He said the focus should be on structural reforms.
The ministry predicts a 5 percent contraction in the world economy in 2020. Global economy will start to recover in the second half of this year, and in 2021 global growth is expected to remain just below 4 percent.
Meanwhile, Statistics Finland reported that Finnish national economic output decreased by 7.9 percent in April year-on-year. Seasonally adjusted output declined by 2.1 percent in April from the previous month.
Commentators noted that the downturn in Finnish production was less severe than initially feared. Timo Vesala, chief economist of Municipality Finance Plc, one of the major financial institutions in Finland, told local business daily Kauppalehti that the crisis hit Finland less severely than Europe on average.
Jukka Appelqvist, senior economist at Danske Bank, said no major plants or work sites had to be shut down in Finland. "Also the cessation of international travel impacted Finland less as the tourist industry is not in a central position". However, Appelqvist warned of the likely decline in export demand later. Enditem