Zurich, Dec. 7 (Bloomberg) -- The Swiss National Bank will probably pare borrowing costs for a fourth time this year today in a bid to keep Europe's seventh-biggest economy from slipping into its first recession in five years, economists said. The bank will steer the 3-month Swiss Libor, its benchmark rate, to about 1.75 percent from 2.25 percent, according to 11 of the 13 economists polled by Bloomberg News. The other two expect a quarter-point cut. The decision will be announced at 9:45 a.m., Zurich time. Economics Minister Pascal Couchepin said last week the Swiss economy may be shrinking. The U.S. and Japan are in recession and Germany's gross domestic product contracted last quarter. The benchmark SMI stock index has declined 20 percent this year. ``We're not yet in a recession, but we're close,'' said Serge Gaillard, chief economist at the Swiss Trade Union Federation and a member of a panel of advisers to the central bank and government. ``There's room for an interest-rate cut.'' Economists predict the Swiss economy will grow as little as 1 percent this year, halving forecasts made six months ago. The SNB governors will have access to third-quarter gross domestic product figures that the government is due to publish next week. Swiss growth probably slowed to an annual rate of 0.7 percent in the third quarter from the second, compared with a 1.7 percent rate in the three months through June, according to a Bloomberg News poll of seven analysts. That would be the slowest since the first quarter of 1999.

Swissair, ABB
The European Central Bank lowered interest rates for the dozen countries that share the euro half a percentage point to 3.25 percent on Nov. 8. Policy makers left rates unchanged at yesterday's meeting. The 15 European Union countries buy more than 60 percent of Swiss exports. The national airline, Swissair Group, filed for bankruptcy in October and will no longer exist by next March. The company cut 4,500 jobs, helping to push the unemployment rate to an eight- month high of 1.9 percent in October. Swiss companies such as ABB Ltd., faced with dwindling demand, are trimming their workforces to reduce costs. Europe's second-largest engineer is eliminating 12,000 positions, or 8 percent of its workforce worldwide. Orders to Swiss machinery and electronics makers dropped 17 percent in the third quarter. The index of leading indicators, compiled by the government- sponsored KOF economic institute, dropped to minus 1.02 in October from minus 0.87 in September. The KOF indicator is the most closely watched gauge of future economic performance in Switzerland. The SNB tries to control monetary policy by steering the three-month Swiss franc Libor with the help of repurchase agreements. The Libor yesterday rose to 1.96 percent, from 1.93. Three weeks ago, the rate reached 2.23 percent.

Currency Hurts Exports
After the Sept. 11 attacks, the franc rose to a record of 1.4395 against the euro. To stop the franc's rise, which hurts exporters and tourism, the central bank lowered rates for the third time this year. The currency has appreciated 3 percent in 2001 and is currently trading at 1.4741 francs per euro. ``Our problem is the strong franc,'' said Giann Theler, chief financial officer at Bergbahnen Engelberg-Truebsee-Titlis AG, one of Switzerland's biggest mountain railway operators. Switzerland is home to companies such as the biggest foodmaker Nestle SA, Europe's third-largest drugmaker Novartis AG and the second-largest reinsurer Swiss Reinsurance Co. It isn't a member of the European Union. The SNB, which has price stability as its main target for monetary policy, won't need to worry about inflation when it makes its decision, economists said. The annual inflation rate declined for six months to 0.4 percent in November. ``There's absolutely no danger of inflation,'' said Gaillard. ``Next year, inflation will be 1 percent or less.''