Unemployment is also expected to rise. Public-sector finance is also expected to weaken and the government will be dealing with a deficit for the first time in a decade. However a slowdown in inflation and increased tax breaks are expected to boost purchasing power.
Government adds it will have to take on two billion euros in additional debt next year to resuscitate the economy.
Officials have also promised to support construction projects and export companies to revive the economy.
Funds for Towns Struck by School Shootings
Government has also proposed more funds for Jokela and Kauhajoki, the Finnish towns struck by school shootings in 2007 and 2008.
According to the proposal, about one million euros would be allocated to establish a weapons registry. Some 880,000 euros would be used to implement a system to monitor the internet. Meanwhile 500,000 euros would be used for youth projects and 200,000 euros would go towards investigating the school shooting incidents.
Government is expected to hand its proposal to Parliament on Friday.
