Prince's Trust study found the young people suffered from insomnia, depression and panic attacks.
Director of the charity said that young people in Wales were particularly badly hit by the recession.
The Assembly Government said young people not in education, employment or training are a priority.
Index of the youth of Prince's trust Macquarie was based on interviews with 2170 16-to 25-year-olds throughout the United Kingdom, 106 of them in Wales.
Is the third annual charity that report and gauges happiness in everything from family life to physical and emotional health.
The Macquarie Group Foundation funded the research, which was carried out by YouGov.
Continue reading the main storyIn Wales, we have suffered enough bad with the unemployment rate of recession and youth "end quote Rick Libbey Prince Trust Cymru Director En found 48% of respondents unemployed argue that their lack of work led to problems such as panic attacks, damage cars and car disgust.
Director of the Prince's trust in Wales Rick Libbey told BBC Radio Wales: "what we have tried to do is distilled down in Wales what this is telling us.
"Those young people who are out of work suffer from a range of mental health problems.
"In Wales we have suffered enough bad with the unemployment rate of recession and youth.
"Unemployment appears to have hit the hardest of all young people, and about one in four young people in Wales suffer from insomnia.
12-year-high
"We found that about one in five people have felt more depressed or all the time and about one fifth of them suffered panic attacks at different times in their lives."
The study follows a report by charity published earlier this month that demonstrated long-term youth unemployment in Wales to a maximum of 12 years.
Continue reading the main storyby addressing the problem of young people not in education, employment or training is one of the priorities of the Welsh Assembly Government "end quote Welsh Assembly Government spokesman said the number of 16-to 24-year-olds on Jobseeker allowance (JSA) for 12 months or more has increased nearly five times from the recession.
Julie White, head of the Macquarie Group Foundation funded the research, said: "the research shows how the Prince's trust schemes that help young people in the world of work can directly address the emotional health of unemployed".
The study revealed that young people in employment, education or training are not known as Neets-are significantly more likely to work or training for "lack of a sense of belonging".
Said a spokesperson for the Government Assembly: "while we cannot comment on the conclusions of a report that we have not had the opportunity to study in detail, addressing the problem of young people not in education, employment or training is one of the priorities of the Welsh Assembly Government.
"We recognize fully the importance of preventing mental health problems and promotion of positive mental health.
"Our goal is to improve the health and well-being in an effort to reduce the incidence of mental health problems for people, but where they occur, services are able to support people through GPs and mental health teams and community access specialist hospital services, if requested."
A spokesman for the Department of labor, and Pensions Committee, said 2011 would see a new program that will give tailored support that they need to move into jobs and stay employed people.
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