June 16, 2020 / 8:40 AM / 16 days ago

UPDATE 1-Finland's finance ministry sees 2020 GDP down 6%

(Adds details, comments)

HELSINKI, June 16 (Reuters) - Finland’s economy is likely to contract 6% in 2020 due to the coronavirus, the Finance Ministry said on Tuesday, worse than its previous estimate in April of a 5.5% annual contraction.

But the ministry raised its 2021 growth forecast to 2.5% from 1.3%, and to 1.7% from 1.3% in 2022, assuming the epidemic would gradually fade out and that no second wave of infections would be seen later this year.

Earlier on Tuesday, Statistic Finland said gross domestic product fell 7.9% in April year-on-year.

The ministry estimates the general government debt will be up this year by about 20 billion euros ($22.7 billion), reaching approximately 71% of GDP, while it expects the general government deficit to climb to over 8% of GDP in 2020.

“Debt is being accumulated this year in general government finances at an extremely rapid rate,” the ministry said.

General government debt will continue to rise, and the debt ratio will be close to 80% in 2024, it added.

The ministry estimates the unemployment rate will rise to 8.5% in 2020, from 6.7% in 2019, according to Statistics Finland. ($1 = 0.8828 euros) (Reporting by Anne Kauranen; Editing by Alex Richardson and Andrew Cawthorne)

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