Bank UBS has become less pessimistic about Switzerland's economic performance this year, forecasting a decline in Gross Domestic Product (GDP) of 1.4 per cent.

The Investment Research division of UBS had previously predicted a downward spiral amounting to 2.4 per cent.

The bank is positive about growth in 2010, saying the Swiss economy will find itself back on track and will see a rise in GDP of 1.7 per cent, which is a one per cent improvement on UBS's previous forecast.

Now that the problems on the financial markets have been overcome, UBS said, companies in the important export sector of the Swiss economy should be able to stabilise their operations.

Meanwhile, UBS chairman, Kaspar Villiger, has said politicians - not banks - were largely responsible for setting off the financial crisis.

"Many banks have made inexcusable mistakes, however these mistakes are not the cause of the crisis," Villiger said on Thursday. "The markets have not failed, they have reacted logically to the misguided incentives set by politicians, in particular [in] the US," he said.

He said these factors were low US interest rates, US political pressure to promote
mortgages to low earners and pro-cyclical accounting rules.

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