The New Zealand Institute says unemployment could rise to levels even worse than in 1991.
The business think tank bases this outlook on recession theories developed in the United States.
It will present a report to the Government at an emergency jobs summit on Friday.
The institute warns New Zealand's unemployment rate could reach 11.2% within the next two years. It calls the figures a worst case scenario.
Unemployment reached a peak of 10.9% in 1991.
Proposals designed to avert job losses are also being submitted by the Institute.
It says private sector loans could be partially underwritten by the Government and a fund could be set aside for strategically important companies.
