Bank of Finland on Tuesday projected the economy to shrink more than estimated this year amid economic restructuring and sluggish global growth.
It forecast gross domestic product to contract 0.8 percent this year, down from the previous projection of 0.4 percent decline. The economy is expected to return to a slow growth of 0.7 percent in 2014, which was also below the 1.5 percent earlier estimate.
The central bank said private consumption will no longer support growth to the same extent as before, with consumer purchasing power and employment both declining. In 2015, economic growth is expected to accelerate to 1.4 percent as exports and investment begin to recover.
"The Finnish economy has faced two major changes at the same time: the restructuring of Finnish industry and the recession in the wake of the financial crisis," said Governor Erkki Liikanen.
The jobless rate is expected to rise to 8.6 percent in 2014, nor it is forecast to fall significantly next year.
The bank said inflation will slow to 2.3 percent in 2013, and further to 1.9 percent in 2014, when the rising trend in energy prices will flatten out and domestic demand will be more subdued.
Further, the bank noted that the weak economic situation is dampening the ability to restore the health of the public finances.
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