The Israeli military offensive in the Gaza Strip in December and January caused four billion dollars of losses to the Palestinian economy, a UN think tank said yesterday.

Overall, the losses represent "three times the size of the Gaza economy," said Mahmud Elkhafif, coordinator of the UN Conference and Trade and Development's (UNCTAD) assistance programme for the Palestinians.

"Initial estimates put the economy's direct and indirect losses at around four billion dollars (2.8 billion euros), including the costs associated with cushioning the humanitarian impact of the military campaign of around one billion dollars," UNCTAD said in a report.

Some 88 million dollars was wiped off GDP due to the halt in economic activity alone in Gaza, it said.

Direct losses, including darAage to infrastructure,

public buildings, power and water supplies, as well as lost raw material stocks could reach 2.5 billion dollars, it added.

The losses in Gaza came after "another lost year for Palestinian development" in 2008 as the overall Palestinian economy lost ground for the ninth straight year, according to UNCTAD.

Although real gross domestic product was in positive territory with two percent growth. GDP per head fell by 1.2 percent, it added.

"The continued isolation of the occupied Palestinian territory under a tight Israeli closure policy and blockade of Gaza has further fragmented the economy," the report said.

The report noted that the closures "deepened Palestinian economic dependence on Israel."

Elkhafif said agriculture and industry "are basically shrinking" in Gaza, where about 90 percent of the population live in poverty.