Finland's economy will slide into a mild recession next year, the Finnish central bank said on Friday, while it once again raised its inflation forecast and lowered economic growth projections for 2022 and 2023.

Bank of Finland now sees 2022 inflation at 7.2% when in September it estimated it to be 7%. Gross domestic product was seen growing by 1.9% this year, down from 2.2% seen in September.

In 2023, inflation is now seen at 5%, up from 4.3% seen earlier, while GDP is now expected to contract by 0.5%, down from minus 0.3%.

Governor Olli Rehn urged Finnish leaders to take corrective action to halt the growth of the general government debt ratio to make sure Finland has the funds to react to future crisis.

"In Finland, economic policy has to focus now simultaneously on both the short-term inflation problem and longer term structural problem," he said. (Reporting by Essi Lehto, editing by Terje Solsvik)