December passenger traffic demand rose by 6.7 per cent, down from 9.3 per cent in November, IATA said in a statement.

"The slower growth for passenger demand in December sets the trend for the coming months," IATA chief executive officer Giovanni Bisignani said.

"Oil prices are higher than ever. Economic uncertainty accompanying the US credit crunch is broadening," he added.

IATA expects passenger demand growth at 5 per cent in 2008, down from 7.4 per cent in 2007.

The year just ended was "the best in recent memory," Bisignani said.

"Strong passenger growth of 7.4 per cent was a key component of the industry's 5.6 billion dollar profit in 2007 -- the first black number since 2000," he said.

Average international passenger load factors reached an industry record of 77 per cent in 2007, up from 76 per cent in 2006.

Middle Eastern carriers registered the strongest growth in 2007 with passenger demand up 18.1 per cent, reflecting strong regional economies, the impact of oil wealth, expanded capacity and new routes, IATA said.

Asia Pacific carriers saw 7.3 per cent growth, showing the "continuing strength of the Chinese and Indian economic expansion," it added.