Switzerland faces recession

The world economic crisis is likely to pull Switzerland into a short period of recession, government economic experts warned on Tuesday.

A report issued by the State Secretariat for Economic Affairs (Seco) forecast a drop of 0.8 per cent in economic activity for 2009, followed by a modest recovery of one per cent in 2010.

They expect a sharp increase in unemployment in 2009 and 2010.

The export sector is particularly exposed to the coming recession, they warned, with a drop of 2.6 per cent likely in 2009, putting exports at their lowest level for about a decade.

Presenting the report, Economics Minister Doris Leuthard said the economic situation had deteriorated drastically since October. A fall in exports was one of the major problems facing Switzerland. The sector should be supported with export risk guarantees, she said.

The government launched a first package to stabilise the markets in October. It will make available SFr900 million ($769 million) for job creation on January 1, Leuthard said. In all, the money being released by the government amounted to SFr3 billion.