The grim outlook was outlined by a state treasury economic and fiscal update released on Friday.

Premier Peter Gutwein has pledged to build the state out of trouble by urgently bringing forward infrastructure projects.

"The report paints a bleak picture, there's no other way of explaining it," he said.

The state, which was on track to record a slim $11 million surplus in 2019/20, will instead have a $716 million deficit.

That figure is expected to balloon to more than $1 billion next financial year.

Instead of growing by three per cent, the state's economy will contract by 1.75 per cent this financial year, treasury predicts.

It would mark the first decline in gross state product since 2012/13 and the largest decline since relevant data started being collected in 1989/90.

Unemployment is forecast to hit 12 per cent in June, meaning about 27,000 people will be jobless.

"We are going to build ourselves out of it," Mr Gutwein said, adding increasing taxes was not on the table.

"In the coming weeks and months, we're going to lay out the most aggressive construction program in Tasmania's history.

"I've tasked Treasury to do an immediate review of our $3.7 billion infrastructure program and identify projects that can be brought forward swiftly."

Net debt is estimated to reach more than $2.3 billion in 2020/21.

The state, which moved before most in closing its borders, is spending $1 billion on COVID-19 support measures.

"It was only in March last year that our economy was the envy of the nation," Mr Gutwein said.

"It was imperative we moved as we did to protect Tasmanian lives."

Tasmania recorded the biggest unemployment rate rise - from 4.9 per cent to the national rate of 6.2 per cent - of any state or territory in April, according to recent Australian Bureau of Statistics figures.

The state budget, usually delivered in May, will instead be handed down in November.

Australian Associated Press