The Ifo Index for the world economy fell to 95.0 points in the fourth quarter of 2014 from 105.0 points in the previous quarter, Ifo announced here on Thursday.
It is now below its long-term average of 95.5 points, reaching its lowest level since the third quarter of 2013, the Munich-based think tank said in a statement.
"Assessments of the current economic situation deteriorated only slightly. Economic expectations, however, were strongly downwardly revised," said Hans-Werner Sinn, president of the Ifo institute, adding "the upswing in the world economy is suffering a setback."
Ifo institute has conducted a quarterly survey in numerous countries on business cycle developments and other economic factors since 1981. The results of this survey are based on responses of more than 1,000 experts from over 100 countries and regions.