HELSINKI (AFP) - Finland's economic outlook is "unusually uncertain" despite expectations for a rebound this year and next as it recovers from a massive slump, the International Monetary Fund said Monday.

• IMF: Economic growth still uncertain for Sweden

In a review of the Finnish economy, the IMF said Gross Domestic Product (GDP) was expected to grow around 1.25 percent this year and some two percent in 2011 following a contraction of nearly eight percent in 2009 due to the global downturn that hit export-reliant Finland especially hard.

"The deep recession is likely to reduce the trend level of output and may also have a negative impact on the growth of potential output," the IMF said.

"This will exacerbate the challenges posed by a rapidly ageing population, not least to long-term fiscal sustainability," it said, adding that despite the expected economic rebound, "the outlook is unusually uncertain."

The IMF recommended Finland undertake adjustments to "secure a sustainable fiscal position starting from 2011," with the focus to on spending cuts and the broadening of the tax base.

"Pension, health- and old-age care reforms, as well as an overhaul of local government finances, are key to containing expenditures," it said, adding that prompt action would "ensure the preservation of the present social model."

Finland's finance ministry said in March it expected the economy to grow 1.1 percent this year and more than two percent in 2011.

The Fund was more upbeat in its assessment of neighbouring Sweden, pointing out that "aggressive stabilisation policies" had offset the impact of the global financial crisis.

It cautioned however that there were still uncertainties surrounding how the ongoing European debt crisis would affect Sweden, noting that the central bank's growth forecasts for the Scandinavian country ranged from minus one to plus five percent for 2010.