(Adds analyst comments, background)
By Katie Reid and Sven Egenter
ZURICH, Feb 27 (Reuters) - Switzerland's leading growth barometer fell to an all-time low in February, the KOF research institute said on Friday, strengthening fears the country's recession may be much deeper than anticipated.
The KOF growth indicator, which points to the economy's likely performance in six months' time, fell to -1.41, the lowest level since the indicator's launch in 1991, missing the lowest forecast in a Reuters poll, which had a median forecast of -1.00.
"This is quite a dismal release," said Sarasin analyst Jan Poser. "The KOF fell significantly and points to a sharp recession also in Switzerland. We expect GDP next week to have quite a negative figure," he said.
News from the economy has been dire over the last couple of months as exporters suffer heavily from a deepening recession in key markets such as the United States and Germany and the country's large banks are hit hard by the credit crisis.
"No economist has ever seen such a sharp decline in the world economy," Poser said.
"Switzerland is an export orientated country and while it does not have the structural problems of excessive consumption or over borrowing, it is clear that the reduction in demand elsewhere will hit the Swiss economy too," he said.
Swiss National Bank board member Thomas Jordan said recently Switzerland may face a deeper recession than anticipated in December when the central bank forecast a decline in gross domestic product of up to 1 percent.
The February figure fell from a downwardly revised -0.93 in January, the KOF Swiss Economic Institute said. "Swiss gross domestic product is hence likely to shrink markedly this spring as compared to last year," the KOF said.
UNCONVENTIONAL TIMES
The Swiss engineering, electronics and metal industry warned this week that the industry may face a long slump as tough credit conditions and a strong Swiss franc were hurting.
The Alpine economy is seen already in recession and economists expect a 0.8 percent quarter-on-quarter decline in gross domestic product in the final three months of 2008, making it more likely the SNB will turn to unconventional means.
"The SNB (has) emphasised unconventional measures such as FX intervention and quantitative easing in attempts to prevent a deflationary spiral in Switzerland, though a further March rate cut to 0.25 percent can by no means be ruled out," said 4Cast analyst Saara Tuuli.
The Swiss franc was little changed after the data, trading 0.2 percent lower versus the euro at 1125 GMT, while it was down 0.7 percent against the dollar.
"Euro/Swiss franc is in a range, it's probably going to trudge a bit lower in that range over time, with the market looking to the SNB to see what they are going to do," said Ray Farris, London-based head of fx strategy at Credit Suisse.
The SNB has slashed interest rates aggressively, taking its target for the 3-month Swiss franc LIBOR down to just 0.5 percent and has indicated it may buy corporate or government bonds or intervene in the forex market should the country face the threat of deflation.
(Additional reporting by Jessica Mortimer; Editing by David Stamp/Victoria Main)