Bern  - Revised government figures for 2009 released Tuesday showed that Switzerland's economy would shrink by 2.2 per cent and the recession would be significantly worse than had been envisaged.

Previous statistics by the Swiss Economic Ministry had predicted a contraction of 0.8 per cent.

The latest forecast said that if there was an easing of the global financial crisis, Switzerland could see slightly positive growth of 0.1 per cent in 2010, even as the labour market would continue to deteriorate.

Swiss unemployment has been on the rise in the recent months, passing 3.4 per cent, which is significantly higher than in previous years.

Earlier this month, the Economic Ministry announced that the Swiss economy shrank in the fourth quarter of 2008 and revised figures to show that the third quarter also saw a contraction, officially putting the Alpine nation into a mild recession.

Two key areas, investments and exports, were hardest hit in the fourth quarter, contributing to the shrinkage. Fixed investments fell by 3.1 per cent and the exports of goods and services dropped by 8.1.

Switzerland's main trading partner, the European Union, is also officially in recession, causing drops in manufacturing orders and demands for services.

An official at the ministry said drops in exports and investments were the main factors contributing to the revised forecast.

Last week, the Swiss National Bank announced it would cut interest rates to a target of 0.25 per cent in an attempt to shore up the economy and prevent deflation. The central bank would also buy up bonds and foreign currency to prevent further appreciation of the franc against the euro.

A cheaper franc would make Swiss exports, a backbone of the economy, cheaper for European customers.

The central bank also downgraded its economic outlook, predicting a drop of 2.5 to 3 per cent in gross domestic product (GDP) in 2009, but, much like the Economics Ministry, was hoping for a return to modest growth in 2010. (dpa)