Page last updated at 11:10 GMT, Tuesday, 17 March 2009

Outlook for Swiss economy worsens

Like its EU neighbours, Switzerland's economy faces an uphill struggle

Switzerland's economy will shrink 2.2% this year, its government has said, a much deeper recession than forecast.

The Secretariat for Economic Affairs (SECO) had previously forecast an 0.8% drop in gross domestic product (GDP).

SECO said there would be a slight recovery in 2010, unless Europe and the US saw a "further downturn".

The forecast comes days after Switzerland - the world's largest offshore financial centre - agreed to accept concessions on bank secrecy.


"The global economic outlook, which was already gloomy at the end of last year, has worsened sharply since the beginning of 2009," SECO said.

The downbeat economic environment would result in further job losses, it added, with the unemployment rate, which stood at 3.4% in February, climbing to 3.8% in 2009 and 5.2% in 2010.

"The deciding factor for the depth and duration of the recession as well as the point of economic recovery is the global economic environment," SECO said, adding that there were "hardly any signs for a rebound in the world economy".

Lindt rabbit
Demand for some of Switzerland's more well-known products is slowing

"In the adverse case of a further downward spiral between financial and real economies, and a further economic downturn in the US and the EU in 2010, the recession in Switzerland would also deepen and lengthen."


Separately, one of the country's most famous chocolate makers, Lindt, said it would miss its growth targets for the year as customers moved away from its premium chocolates.

The firm, well-known for its chocolate Easter Bunnies wrapped in gold foil, said sales were likely to increase by between 2% and 5% - short of its target of between 6% and 8%.

Earlier this week, Switzerland said that in line with OECD rules, it would now respond to overseas requests for information in cases of suspected tax evasion, and not just tax fraud.

It is estimated that Switzerland's banks hold $2 trillion (£1.4tn) of global wealth held abroad.

Before the announcement, Switzerland had risked being added to the OECD's global blacklist of uncooperative tax havens.

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Lanka Business Online Shrinking Economy - 39 hrs ago
Khaleej Times Swiss economy to shrink 2.2 percent in 2009: data - 49 hrs ago
Reuters UPDATE 1-Lindt 2008 profit up 4 pct, downbeat outlook - 51 hrs ago

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