Switzerland's economy is expected to shrink 2.2% this year - much deeper than previously forecast.
It comes just days after the world's largest offshore financial centre agreed to accept concessions on bank secrecy.
The Secretariat for Economic Affairs previously forecast an 0.8% drop in gross domestic product and more job losses.
The BBC reports the unemployment rate, which stood at 3.4% in February, is now forecast to reach 3.8% in 2009 and 5.2% in 2010.
SECO said there would be a slight recovery in 2010, unless Europe and the US saw a "further downturn".
Earlier this week, Switzerland - the world's largest offshore financial centre - agreed to accept concessions on bank secrecy.
In line with OECD rules, Switzerland will now respond to overseas requests for information in cases of suspected tax evasion, and not just tax fraud.
Before the announcement, Switzerland had risked being added to a global blacklist of uncooperative tax havens by the OECD.