Finland’s Lockdown Seen Cutting GDP by as Much as 2% Per Month
Finland’s lockdown will cause GDP to shrink between 1.5% and 2.0% for each month that it is in place.
(Bloomberg) --
Finland’s lockdown will cause gross domestic product to shrink between 1.5% and 2.0% for each month that it is in place, the Finance Ministry said Thursday.
The longer the restriction measures last, the slower the recovery will be, Mikko Spolander, director general of the Economics Department, told reporters in Helsinki.
“The danger is that the longer the economy suffers, the greater the difficulty in reviving it,” he said.
Finland has since March banned gatherings of more than 10 people, asked people to work from home, closed most schools and universities and halted international travel. Restaurants may only serve take-away meals. The crisis has already cost 17,000 jobs and more than 400,000 workers face temporary furlough without pay.
The ministry is currently estimating a contraction of 5.5% this year, provided the lockdown lasts three months. The economy could shrink as much as 12% if activity remains constricted for six months, it said.
The Figures:
- GDP is forecast to shrink 5.5% in 2020 and grow 1.3% in both 2021 and 2022.
- Exports are set to contract 6.2% in 2020 and resume growth in 2021.
- Private investments will shrink 10% in 2020 and public investments will grow 6.4%.
- The unemployment rate is expected to rise to 8.0% in 2020, from 6.7% in 2019. According to the most pessimistic scenario, it may jump to 11.3%.
- The public debt-to-GDP ratio will grow by almost 10 percentage points to 69% this year and near 80% by 2024. In the more pessimistic scenario, the debt ratio could reach 100% by 2024.
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