Traffic has been up every month so far this year, partly due to comparisons with last year, when there were travel disruptions during the Arab Spring political turmoil across the Middle East, but the figure for July has so far been the smallest increase.

On a monthly basis, passenger traffic was up just 0.3 percent.

"It becomes clear that since early this year the pace of air travel expansion has slowed, largely as a result of falling business confidence and world trade," IATA said in a statement.

International freight traffic, seen as a short-term leading indicator of economic growth, fell by 3.3 percent over the same period compared with 2011.

Freight traffic rose 0.1 percent on a monthly basis.

Middle Eastern carriers reported the best growth rates for both passenger and freight traffic, while North American airlines reported negative figures for both sectors, IATA said. (Reporting by Emma Farge and Tom Miles; Editing by Patrick Graham)

• A Permanent Economic Emergency