STOCKHOLM - Hit by the global economic crisis, Sweden's economy last year suffered its largest annual setback in more than half a century, the national statistics agency said Monday.

Sweden's gross domestic product, or GDP, "dropped 4.9 per cent compared to 2008, which is the largest annual fall since World War II," Statistics Sweden said in a statement.

For the fourth quarter of 2009, the Scandinavian country saw its economy contract 1.5 per cent from the same period a year earlier, while its GDP slipped 0.6 per cent compared to the July-September period, the statistics agency said.