RIGA, August 8, 2008 (AFP) - Growth in Latvia, one of the EU's ex-communist 'Tiger' economies, all but stalled in the second quarter as output expanded 0.2 percent compared to the same period of 2007, official estimates showed on Friday.

The economy has slowed sharply in recent months as a retail boom finally tails off in the face of rampant inflation and government restrictions on loans which aim to dampen breakneck consumption, and overall confidence is dented by global turbulence.

In the first quarter of this year growth had slowed to 3.3 percent, from 8.0 percent in the final quarter of 2007.

The economy had expanded 11.2 percent in the third quarter of 2007, 11.0 percent in the second and 10.9 percent in the first three months.

Latvia's central bank has already cut its 2008 growth forecast to 2.5 percent from 5.0 percent.

For all of 2007, the Latvian economy grew 10.2 percent, one of the highest rates in the world, after 11.9 percent in 2006, which was the fastest pace since Latvia's independence from the Soviet heralded a market economy.

Latvia, like Estonia and Lithuania, broke free from the crumbling Soviet Union in 1991 and joined the European Union in 2004.

Robust domestic consumption, hand in hand with climbing food and fuel prices, has turned this country of 2.3 million people into an EU inflation blackspot.

Inflation has, however, begun to decline as the economy slows down.

In July, Latvian 12-month inflation dropped to 16.7 percent from 17.7 percent the previous month, marking the second consecutive decrease following more than a year of constant rises.

Inflation had hit a 12-year high point of 17.9 percent in May, after climbing from 17.5 percent in April and 16.8 percent in March.

Estonia and Lithuania are also grappling with high inflation, in July recording 12-month rates of 11.1 percent and 12.2 percent respectively.

They are also facing a economy slowdown.

Estonia is doing worst: in the first quarter, output there increased by just 0.1 percent. Estonian authorities are due to release their second-quarter estimate next week.

The Estonian central bank has more than halved its 2008 growth forecast to 2.0 percent from 4.4 percent.

In 2006, the Estonian economy boomed with 11.4 percent growth, the fastest-ever rate since independence. Last year, it grew 7.1 percent.

Lithuania is faring better: its economy grew by an estimated 5.5 percent in the second quarter, after 7.0 percent in the first three months.

Lithuania's economy had grown 8.8 percent in 2007, but its central bank has cut its 2008 forecast to a still-solid 6.0 percent from 6.6 percent.