Speaking at a forum on Finland’s economic development organised by the Finnish Innovation Fund, Sitra, Krugman said that technically the global economy began to rebound at the end of the summer. He added, however, that unemployment could worsen for up to a year and a half, despite growth.

"Prospects for slow growth--maybe even some quarters of negative growth are really quite strong. The forces of recovery now are largely temporary factors. We don't have very much reason to think we've got a solid recovery on tap," said Krugman.

While Krugman sees some bright spots, he added that the recession in Finland could last for quite some time. The effects of the government's stimulus efforts are wearing off and exports offer little remedy in global markets still gripped by the downturn.

"From the general grounds that Finland is a manufacturing, exporting economy, I would expect GDP growth to turn positive quite soon because we're seeing a worldwide bounce back in manufacturing--but that's a long way from full recovery," Krugman explained.

For now, Krugman says Finland's best bet is to stick to its stimulus efforts to protect jobs.

"There are times when it's good to run deficits and this is one of them, so don't try to balance the budget right now," advised Krugman.