The Swiss government on Wednesday approved a third, 750-million-Swiss franc (498-million-euro, 690-million-dollar) economic stimulus package amid signs that the recession could continue into next year. "Since February 2009, when the decision to launch the second round of measures was taken, the outlook for the Swiss economy has continued to deteriorate," the economy ministry said in a statement after a cabinet meeting.
Switzerland formally entered recession in the first quarter when its economy shrank by an additional 0.8 percent, according to figures released at the beginning of the month. The latest forecast from the ministry's panel of economists released Wednesday indicated that negative growth was expected to continue next year.
The Swiss economy is now likely to contract by minus 2.7 percent this year, instead of 2.2 percent, and by minus 0.4 percent in 2010 instead of growing by 0.1 percent. The third stimulus package was aimed at "softening the consequences of the recession and encouraging a return to growth," the statement said.
The additional cash injection "will amount to 750 million francs," it added. The bulk of the package, about 400 million francs, was aimed at tackling unemployment, which is expected to reach an average of 5.5 percent next year. The measures were aimed mainly at young people and to stifle long-term unemployment.
The rest included support for innovative small and medium sized businesses, 200 million francs to cut the cost of personal health insurance and 150 million francs to reform Value Added Tax (VAT). The Swiss government launched its first 890-million-franc stimulus package last November followed by a second round of 700 million francs in February.