(Reuters) - Finland’s Finance Ministry stuck to its 1.0% growth forecast for 2020 and said the economy would expand just 1.1% in 2021 and 1.2% in 2022, held back by an indifferent international outlook.
“The global economy will recover starting from 2020, but the recovery is very slow,” the ministry said in a statement on Wednesday. “The foggy outlook for the international economy will eat into corporate investment while construction will decline.”
The Finnish central bank this week cut its growth forecasts to 0.9% for 2020 and to 1.1% for 2021.
The center-left coalition in June agreed a big increase in public spending on welfare and infrastructure, to be paid for by tax hikes, sales of state assets and higher employment.
The ministry said GDP growth after 2022 could slow to below 1%, and that the debt ratio was set to grow: “In the absence of measures to improve the employment rate and productivity in local and central government, general government finances will remain in the red for the next few years.”
It put general government gross debt at 58.5% of GDP this year, rising gradually to 60.4% in 2022.
The new coalition — which this month appointed a new prime minister and finance minister — aims to boost the employment rate to 75% by the end of its four-year term in 2023 from 72.4% last April.
The ministry expects the employment rate to reach 73.6% in 2022.
It raised its GDP growth forecast for this year back up to 1.6% from 1.5%, citing private consumption growth and rising service exports.
Reporting by Tarmo Virki in Tallinn; Editing by Kevin Liffey