UBS AG, the largest bank in Switzerland by market capitalization, revised Switzerland growth forecasts for 2012 and 2013 higher, with expectations Switzerland will not slip into a recession in spite of the impact of the strong franc.

Reto Huenerwadel, a senior economist at UBS said the clouds darkening the European, and with it the Swiss economic outlook at the time of our last forecast in early December, have lost some of their scare of late.

UBS projects the economy to expand by 0.9% this year and by 1.9% next year, revised higher from prior anticipations of 0.4% and 1.6% respectively.

UBS also revised growth forecast for Germany, the euro zone's largest economy, France, Italy, Sweden and Norway.

The rationale for us lifting our Swiss growth outlook stems from the stabilization of financial markets--not least on the back of the two liquidity measures set up by the European Central Bank--which has helped reduce the risks of uncontrolled de-leveraging in large parts of the euro-zone, Huenerwadel said.