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The decline in Jersey's finance industry is mainly to blame for the island's shrinking economy, says a States economist.

Jersey's Gross Value Added (GVA) declined by 5% last year, making the value of economic activity the lowest recorded since 1998.

The States economist said it was expected because of the recession.

The finance sector, which makes up 40% of the economy, declined by 11% in 2010, and has fallen 28% since 2008.

But other industries such as the building and hospitality trades saw some growth.

David Warr, from Jersey's Chamber of Commerce disagreed, saying he had seen little sign of any growth.

He said while the economy in Jersey was coping with the global recession better than many other places, it was important not be complacent.

Mr Warr said: "This is a worry, Jersey's had a successful tourism industry - it collapsed through the 1990s, we've got half the bed spaces we had 20 years ago.

"We've had an amazingly successful finance industry and we still have it, but it's just not delivering the profits that we ever did."