"Two quarterly falls in a row was really a surprise," Tiina Helenius, the chief economist of Handelsbanken Finland, one of the country's biggest banks, told the AFP news agency.

She said "consumers remain cautious, which is visible in particular in the very weak demand for services."

Hit by global crisis

Finland last year just barely emerged from its worst economic slump in 90 years.

Because of its high dependence on foreign trade, the Nordic country has been hit harder by the global economic downturn than most other European Union countries.

Recession began to plague the country at the end of 2008, and the economy had a negative growth of 7.8 per cent last year, its worst result since 1918 and the largest decline in the euro area that year.

Going forward, the development will depend very much on recovery in key export countries like Sweden, Russia and Germany.

Earlier this week, the International Monetary Fund predicted the Finnish economy to grow by only 1.25 per cent this year and about 2 per cent in 2011.

"The economy contracted by almost 8 percent in 2009, and while a rebound is expected this year and the next, the outlook is unusually uncertain," the fund said in its June 7 review.

Foreign trade has been slow to pick up and unemployment started a gradual climb last year, peaking at 10.9 per cent in May. This year it has stayed at over 9 per cent.