The ratings agency said Finland could experience "protracted stagnation" due to its aging population, shrinking workforce and weakening external demand.

It also revised the country's outlook to "stable" from "negative."

In addition, S&P cited the country's dwindling market share in the global IT industry and its relatively rigid labor market as contributing factors.

Finland, which has an economy of about $256 billion, has struggled to consolidate its public finances and reduce public debt, the agency said. It expects the country's deficit to widen to 2.7 percent of its gross domestic product in 2014.