* Govt sees longer, deeper recession than so far anticipated
* Swiss retail sales rise in April, ZEW posts 3-year high
* Economy minister says recovery still far away
(Adds government comments)
By Sven Egenter
BERNE, June 17 (Reuters) - The Swiss government launched a fresh set of measures on Wednesday to fight a deep recession after its economists took a more pessimistic view on the economy, despite first signs of stabilisation.
"We are still far away from a recovery," said economy minister Doris Leuthard. The focus was now on fighting the rise in unemployment. "We want to keep the social consequences of the crisis relatively small," she told a news conference in Berne.
All in all the extra stimulus from the third package of stabilisation measures will amount to 750 million Swiss francs ($688.7 million).
Government economists cut their GDP forecast once again, expecting a deeper and longer recession than so far anticipated as a slump in exports hits domestic business and drives up unemployment.
The Swiss economy will shrink by 2.7 percent this year and by 0.4 percent in 2010, the State Secretariat for Economic Affairs (SECO) predicted. It forecast an average drop in consumer prices of 0.5 percent in 2009 but saw prices rising 0.9 percent in 2010.
The government proposed extra spending of some 400 million francs in labour market measures for 2010, which include temporary employment in non-profit organisations, subsidies for training programmes and internships in government institutions.
Also part of the third package are 200 million francs in subsidies for health insurance and 150 million francs in tax reductions due to a reform of the value-added tax system, which had already been approved earlier.
The government said the worsened economic outlook warranted the third package, which comes on top of 1.7 billion francs in two earlier sets of measures.
However, Leuthard said the total economic stimulus amounted to 7 billion francs this year and over 4 billion francs next year, when measures taken by the cantons (states) and deficits run by social security systems were also considered.
RESILIENT CONSUMERS
The economy slipped into recession in mid-2008 but has held up better then many neighbouring countries as Swiss consumers have kept high spending.
Retail sales data from April on Wednesday once again highlighted consumers' resilience: sales rose 1.2 percent from a year ago as consumers bought more food and beverages but also spent more on electronics, personal accessories, health products and leisure.
But the SECO economists, who had expected a return to growth in 2010 in a March forecast, warned that a rise in unemployment would hit consumption next year.
They forecast an increase in the unemployment rate to 3.8 percent this year and 5.5 percent in 2010. Consumption is seen rising 0.2 percent in 2009 but falling 0.2 percent next year.
The Swiss National Bank has taken drastic steps to fight the recession, including interventions to weaken the Swiss franc, as falling consumer prices have stoked fears of deflation.
SNB vice-chairman Philipp Hildebrand also supported government measures that would help to keep unemployment down.
The SNB, which makes its quarterly interest rate decision on Thursday, is widely expected to stick to its ultra-loose monetary policy well into 2010 despite first signs that the trough for the economy may be near.
The ZEW investor sentiment indicator rose to 9.7 points in June, posting its first positive reading since September 2006.