More Gloom in Store for Global Economy According to ICC/Ifo Survey

High oil prices are an ongoing concern.
High oil prices are an ongoing concern.

Paris and New York, August 19, 2008 – The ICC/Ifo global economic climate index in July fell for the fourth consecutive quarter, recording its lowest level since 2001, according to the International Chamber of Commerce. Survey respondents also predicted increased economic upheaval as the result of rising oil prices.

The ICC/Ifo world economic climate index for the third quarter, which polled over a thousand economic experts in 92 countries, dropped 8.0 points to 73.4 from 81.4.

Sentiment darkened especially in Western Europe and Asia. While economists’ view of the current U.S. economy scored its lowest marks seen in a decade, they slightly raised their expectations for the U.S. economy in the coming six months due to expectations of a pickup in U.S. exports.

The Paris-based ICC is the world business organization, a representative body that speaks with authority on behalf of enterprises from all sectors in every part of the world. ICC participates in the quarterly survey with the Ifo Institute for Economic Research and the Center for Economic Studies at Ludwig Maximilian University, both based in Munich, Germany. The United States Council for International Business (USCIB), based in New York, serves as ICC’s American national committee.

The global climate index fell in all major Asian economies. In some of the major economies of Latin America, including Brazil and Mexico, economists also foresee a cooling off period for the second half of the year.

Economists surveyed said the greatest impediment to global economic growth is rising inflation, which they say is further aggravating the cyclical downturn. They estimated worldwide inflation at 5.2 percent. Economists polled raised their expectations for inflation in each region of the world: 3.8 percent for the US, a major upgrading in inflationary expectations in Europe to 3.5 percent, and pegged inflation at 5.3 percent in Asia, 9.7 percent in Latin America, and 14.5 percent in the CIS states.

Despite expectations for a further weakening in the global economy, economists reversed their previous view on interest rates. In the current survey, economists said they expect a rise in central bank and long-term interest rates.

$130 oil contributing to economic slowdown

ICC asked a special question in the current survey on the impact of rising oil prices on the global economy and the ability of companies and countries to meet their energy needs.

A large majority of economists said they expect oil prices above $130 (U.S.) a barrel to create disequilibrium and reinforce recessionary tendencies in the global economy in 2008, and to negatively affect company earnings.

Over the next six months, economists also said that $130 oil will lead to high current account deficits in many Asian countries, in South Africa, and in several European countries, including Spain, Portugal and Greece.

At the same time, economists saw a silver lining to oil prices at that level: in Western Europe, North America, and major Asian economies, economists expect $130 oil to induce companies to invest in cleaner and more efficient technologies.

USCIB promotes an open system of global commerce on behalf of its membership of more than 300 leading U.S. companies, professional service firms and associations.  As American affiliate of ICC and other leading international business and employers’ organizations, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.  More at


Jonathan Huneke, VP Communications, USCIB
+1 212-703-5043 (office), +1 917-420-0039 (mobile) or

World Economic Survey Graphs (ICC Website)

Special Question Figures (ICC Website)

Staff Contact:   Kira Yevtukhova

Deputy Director, Marketing and Communications
Tel: 202.617.3160

Kira Yevtukhova manages USCIB’s print and online publications, including the website, e-newsletter and quarterly magazine, and serves as the organization’s digital media strategist. Prior to this role, Kira worked for over five years within USCIB’s Policy Department, focusing on climate change, environment, nutrition, health, and chemicals related policy issues. She is a graduate of Mount Holyoke College and has an MBA from Georgetown University’s McDonough School of Business.
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