Recession expected to worsen

The recession in Switzerland will be worse than expected in 2009 with the economy shrinking by 2.2 per cent, government forecasters say.

The State Secretariat for Economic Affairs (Seco) has adjusted its previous prediction that the gross domestic product would decline by 0.8 per cent, in a report released on Tuesday, but says there will be a 0.1 per cent recovery as of 2010.

Unemployment, which rose to 3.4 per cent in February, is expected to increase to 3.8 per cent in 2009 as a whole and to 5.2 per cent in 2010.

“The outlook of the global economy, already gloomy at the end of last year, has once again deteriorated considerably since the start of 2009,” a Seco statement said.

Seco said it was aligning its forecast to that of the Swiss central bank which recently predicted GDP would decrease by up to three per cent.

Seco noted that the positive effects of the economic support measures taken around the world would take root “progressively” and stabilisation in the international financial markets “gives hope” that the global financial crisis will eventually be curbed. But a worsening in the situation globally would lead to an even greater recession in Switzerland.

Swiss industry suffered in the fourth quarter of 2008, the Federal Statistics Office said on Tuesday. Compared to the same quarter in 2007, production decreased by 5.9 per cent and sales also receded by 1.7 per cent.