Scotland can expect to lose 159,000 jobs over the three-year course of the recession, according to economists at Strathclyde University.
In its latest survey of the Scottish economy, the Fraser of Allander Institute said the downturn could be more severe than the 1980s recession.
It predicts a 2.6 % contraction this year and 1.2% in 2010, but said it will fare better than the rest of the UK.
Latest figures put the number of people out of work in Scotland at 137,000.
The survey from the Fraser of Allander Institute presents a much gloomier outlook than previous reports.
In November, the same team foresaw the recession would only lead the economy into negative growth during this year, and that would only be by 1.1%.
In the mainstream set of outcomes for the economy, the economists said last year saw 14,200 fewer jobs in the Scottish economy. This year is on course for a decline of 94,200 and a further 51,400 next year.
Worst case scenario
The survey predicted modest growth of 3,000 jobs in 2011 and 14,500 in 2012. The peak of unemployment would be in 2010, at 7.9%, up from last year’s 5.1%.
The worse case scenario is for the job losses to continue into 2011, and the total to reach 192,000 fewer jobs. That would mean the unemployment rate peaking at 8.5%.
The report said the Scottish economy may not fare as badly as the rest of the UK, as it had less of a property bubble, a larger public sector and more welfare payments.
It also reverses the previous view that the importance of the finance sector to Scotland would see it struggle more than the rest of Britain.
The credit crunch is not seen as being as significant as the lack of demand in the economy for goods and services.
Scottish businesses are undoubtedly in for a tougher, longer ride in the downturn than was previously thought…
Paul Brewer, PriceWaterhouseCoopers
The survey also examined the likely impact of efforts to stem the economic crisis.
The UK Government’s fiscal stimulus is viewed as “too little too late”, and small when compared to the United States. It is argued that the case for temporary nationalisation of banks and the creation of a “bad bank” for toxic assets is growing stronger as the only means of unfreezing lending.
The Scottish Government’s six-point economic plan is seen as having a “negligible” effect on counter-acting the recession. It is recommended more could be done to tackle the consequences of recession, including training and help with business start-ups.
Paul Brewer, of PriceWaterhouseCoopers, which sponsors the academic research, said: “Scottish businesses are undoubtedly in for a tougher, longer ride in the downturn than was previously thought, and they should be under no illusion now as to how suddenly their trading position could change in the current volatile and uncertain climate.
“It is imperative that the Scottish Government and organisations such as Scottish Enterprise put every effort behind supporting Scottish companies through use of their investment funds and through training programmes for those seeking work.”
Figures from the Office for National Statistics published earlier this month revealed unemployment in Scotland had risen by 8,000 over the last year, taking the total out of work to 137,000.
The number of people out of work and claiming benefit increased by 3,400 in January to just over 101,000.