Ifo index for the economic climate in the euro area declined to 124.0 points in the third quarter from 129.2 points in the previous quarter, the Munich-based think tank reported here on Thursday.

"The six-month economic outlook clouded over markedly, although assessments of the current economic situation brightened slightly," said Hans-Werner Sinn, president of Ifo institute.

"The economic recovery in the euro area economy will lose momentum," Sinn added.

According to Ifo's survey, assessments of the current economic situation improved everywhere except Germany, Finland and Lithuania, but it remains favorable in Germany.

Meanwhile, the six-month economic outlook in most euro countries was less positive than three months ago.

The report noted that the forecast of an average inflation rate for 2015 in the euro area rose to 0.8 percent from 0.6 percent.

Ifo is one of Europe's leading research institutes. Its business climate index is considered as the most important barometer for the German economy.