Berne - The Swiss economy shrank in the fourth quarter of 2008 by 0.3 per cent compared with the previous quarter, the State Secretariat for Economic Affairs said Tuesday.

Revised figures for last year's third quarter showed the economy had contracted slightly - by 0.06 per cent - an official said, putting Switzerland officially into a mild recession.

The decline in real gross domestic product was 0.6 per cent when compared to the last quarter of 2007.

The economic secretariat's forecast for 2009, last published in December, predicted an annual shrinkage of 0.8 per cent. The figure is expected to be updated later this month.

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.

Last year, the Swiss National Bank cut its benchmark interest rate to 0.5 per cent, as part of a coordinated global attempt to boost lending and unfreeze credit markets. With the latest economic news, analysts did not expect the rate to change.

The head of the SNB, Jean-Pierre Roth, who announced that he would retire at the end of the year, said previously that Switzerland would likely enter into a mild recession along with most of the European economies and would not recover until at least 2010. (dpa)