Economists at Credit Suisse bank have drastically downgraded their forecast for the Swiss economy by predicting a recession this year.
The bank now believes gross domestic product (GDP) will shrink by 0.6 per cent in 2009, as opposed to the one per cent growth it forecast last September. Credit Suisse blamed the revision on worsening conditions at the end of 2008.
"The Swiss economy still appeared to be robust until the end of October 2008. But in November, order book levels in industry literally collapsed overnight," the bank said in a statement.
"Since then, the Swiss economy has no longer been able to escape the significant downward trend throughout the world."
Credit Suisse predicted that the country's export volume would fall by 2.3 per cent but that the rate of inflation would ease to 0.7 per cent.
Figures released on Thursday revealed that the rate of unemployment reached three per cent in December and Credit Suisse believes this will rise to 3.4 per cent of the working population. However, the bank insisted that consumer spending would continue to prop up the economy.