World airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand, industry body IATA said on Tuesday.

The International Air Transport Association had estimated in December the industry would lose $2.5 billion in 2009.

The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago, Director-General Giovanni Bisignani said in a statement.

IATA, which represents 230 airlines including British Airways , Cathay Pacific <0293.HK> and United Airlines , and Emirates , also raised its estimate of international airline losses in 2008 to $8.5 billion, from its previous $8 billion estimate.

(Reporting by Robert Evans; Editing by Dan Lalor)