HELSINKI, April 8 (Reuters) - Finland's economy contracted by almost one-tenth in January as the downturn spread to the services sector, data showed on Wednesday, confirming economist views that the Nordic country faces a bleak start to 2009.
Gross domestic product plunged 9.8 percent year-on-year in January, Statistics Finland (SF) said, the steepest drop recorded since it started collecting data in 1996.
December's GDP contraction was revised down to 5.9 percent from a previous 4.8 percent, with GDP now having fallen for three straight months.
The January figure was weighed by a 17-percent drop in secondary production, which includes manufacturing and construction, and a six-percent slide in services production that caught economists off guard.
"We were waiting for a bad set of data, but this was still a negative surprise," said Handelsbanken economist Tuulia Asplund. "The main surprise came from the services sector, and construction looked bad too."
Finland's GDP is expected to contract by some five percent in 2009, hit by weaker export demand and consumer spending, but some have forecast a drop as sharp as 6.5 percent.
Economists have said the first quarter of 2009 will be especially toughest, after which the pace of economic decline should start to slow, although the government has said it does not expect to see a return to annual growth until 2011.
"We believe that Q1 will be very, very bad. February and possibly March will be bad too," said Pohjola Bank economist Jorma Vanninen, adding he was now waiting for February industry output data from SF on Thursday.
Finland has responded to the downturn with plans to spend heavily, as well as cut taxes. Finance Minister Jyrki Katainen warned last month the country could take on up to 60 billion euros ($79.13 billion) in extra debt in the next four years.
(Reporting by Brett Young; Editing by Ron Askew))