Global economy coming to a halt, Ifo says

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FRANKFURT, June 25 (AFP): The global economy is coming to a halt, the Munich-based Ifo economic research institute said yesterday, amid slowdowns in western Europe, the United States and China.

Ifo's World Economic Climate indicator fell "to its lowest level in more than six years" in the second quarter of 2008 and the decline "was particularly marked in North America and Western Europe," a statement said.

"The expansion of the world economy will decelerate perceptively in the forecast period" of 2008/2009, it added.

"In the wake of the US real estate crisis and the turbulence on the international financial markets, the dynamics of world economic activity have weakened."

In the United States, growth will remain weak as the US Federal Reserve adopted more restrictive monetary policy measures to fight inflation while growth would flatten out in the 15-nation Eurozone, the Ifo said.

Eurozone consumption would "expand at only a restrained pace despite the favourable situation on the labour market," Ifo said.

Investment would lose momentum "since the apex in the investment cycle seems to have been passed."

Asian growth "will be dampened by inflationary developments, especially for food and raw materials," Ifo said. Weaker conditions worldwide would take some steam out of the Chinese economic expansion, as would more restrictive monetary policies.