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RIYADH: Middle Eastern air cargo capacity grew 1.5 percent year on year in June, even as regional demand contracted by 3.2 percent due to geopolitical tensions and airspace disruptions. 

The rise in available cargo space, measured in available cargo tonne-kilometers, came amid route disruptions over parts of Iran, Iraq, Israel, and Lebanon. These factors drove the region’s second consecutive monthly contraction in cargo volumes, according to the International Air Transport Association’s latest air cargo market report.

The performance reflects a broader slowdown in global air cargo, with IATA’s mid-year forecast projecting 0.7 percent volume growth, down from 11.3 percent in 2024. 

The slowdown is attributed to rising protectionism, including new US tariffs and the rollback of de minimis exemptions on low-value imports, which could dampen e-commerce-related air freight. 

“The June air cargo data made it very clear that stability and predictability are essential supports for trade,” said Willie Walsh, IATA’s director general. 

“Emerging clarity on US tariffs allows businesses greater confidence in planning. But we cannot overlook the fact that the ‘deals’ being struck are resulting in significantly higher tariffs on goods imported into the US than we had just a few months ago,” he added. 

While the full economic impact of these trade cost barriers remains to be seen, Walsh said governments must step up efforts to make trade simpler, faster, cheaper, and more secure through digitalization. 

The Asia-North America and Africa-Asia trade lanes each contracted by 4.8 percent, while Middle East-Europe declined by 4.5 percent. In contrast, trade between Europe and Asia expanded by 10.6 percent, maintaining 28 consecutive months of growth. 

“Overall, air cargo demand grew by a modest 0.8 percent year-on-year in June, but there are very differing stories behind that number for the industry’s major players,” Walsh said. 

Trade tensions dragged North American traffic down 8.3 percent and left European growth at 0.8 percent, but Asia-Pacific defied the trend with a 9 percent expansion. 

“Meanwhile, disruptions from military conflict in the Middle East saw the region’s cargo traffic fall by 3.2 percent,” added Walsh. 

Despite the challenging backdrop, some fundamentals remain supportive. Global industrial production rose 3.2 percent year on year in May, and goods trade increased by 3.5 percent. 

Jet fuel prices in June were 12 percent lower than a year ago, easing cost pressures for carriers. 

While the global Purchasing Managers’ Index recovered to 51.2, signaling expansion, new export orders remained in contraction at 49.3. 

Adding to the complexity of the regional dynamic, Middle East airlines are simultaneously expected to post the world’s highest net profit margin in 2025 at 8.7 percent, according to IATA’s June industry forecast presented at its 81st annual general meeting in New Delhi. 

The region is projected to generate a net profit of $6.2 billion, up from $6.1 billion in 2024, and is expected to earn $27.20 per passenger, outpacing all global peers despite demand volatility and regional instability. 

RIYADH: Loan agreements worth $92.7 million signed by the Saudi Fund for Development are set to boost the water, housing, infrastructure, and health sectors across Barbados.

The first deal, valued at $58.5 million, aims to improve the primary healthcare system by constructing two new medical centers and rehabilitating seven others to expand services and enhance the quality of care.

The second agreement, worth $34.2 million, will support an urban renewal project focused on water, housing, and infrastructure development to enhance flood protection and improve resilience to environmental changes, according to the Saudi Press Agency.

CEO of the SFD, Sultan bin Abdulrahman Al-Marshad, signed the deals with the Prime Minister of Barbados, Mia Amor Mottley.

This is consistent with the SFD’s history of supporting over 800 development projects, totaling $20 billion, in more than 100 countries since its inception in 1974.

SPA’s report noted: “These two agreements represent the first steps of development cooperation between the SFD and Barbados.”

It added: “This development cooperation embodies the Fund’s keenness to support small island developing states; to overcome economic, environmental and development challenges, as well as the importance of international cooperation and solidarity to achieve sustainable development goals, to contribute to enhancing social growth and economic prosperity in developing countries.”

The entity’s goal is to support sustainable progress in developing nations by offering soft loans and grants to fund key development projects. The SFD’s mission includes raising living standards, promoting economic and social advancement, and strengthening development aid through strategic partnerships.

In July, the SFD allocated $32 million to boost social infrastructure in Bosnia and Herzegovina, targeting science, technology, and higher education facilities.

At the time, the fund allotted $19 million for the construction of a Science and Technology Park and $13 million for the development and outfitting of a new student dormitory at the Borisa Starovic Public Institution Student Center in Foca, in the country’s southeastern region.

In the first nine months of 2024, the SFD supported various initiatives across the world, including a $101 million investment for the Shounter and Jagran-IV Hydropower Projects in Pakistan, a $55 million loan to bolster Turkiye’s education sector, and a $5 million grant to fund a water project in Benin.