Finlands central bank forecast in a report that gross domestic product would contract 0.8 percent in 2013, in a hefty markdown to its December forecast for 0.4 percent growth. It also cut its estimate for 2014.
The triple-A rated Nordic nation was seen as one of the most stable in the euro bloc thanks to prudent fiscal policies. But weak European demand has dented the country's exports of paper, machines and ships.
Bank of Finland Governor Erkki Liikanen noted that a struggle among such old Finnish industries to compete with foreign rivals added to the slowdown.
"The Finnish economy has faced two major changes at the same time: the restructuring of (its)... industry and the recession in the wake of the financial crisis," he said.
Data last week showed the country fell into recession, with GDP contracting for the second quarter in a row in the January-March period.
Read more: Bank of Finland slashes outlook, sees GDP shrinking 0.8 pct in 2013 | Reuters
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