Reuters reports that the six Gulf Cooperation Council (GCC) nations are facing their worst economic crisis in history amid the double shock of plunging oil prices and the coronavirus pandemic, the Institute of International Finance (IIF) said.

Overall real gross domestic product (GDP) will contract 4.4% this year, despite some indications that the virus spread has been successfully contained and the easing of some restrictions in recent weeks, said the IIF, a global financial industry body.

Cuts in public spending adopted by regional authorities to contain the widening of their deficits "could more than offset losses stemming from reduced oil exports" but aggregate deficits are still expected to widen to 10.3% of GDP this year from 2.5% in 2019.

The Saudi central bank said yesterday it would inject an additional $13.3 billion into the local banking system to help banks support the private sector, after consumer spending fell sharply in April due to virus containment measures.

For the IIF, the regional banking system remained solid, with strong liquidity and capitalisation, and relatively low non-performing loans. Liquidity support measures introduced by GCC authorities to support banks amount to 4% of GDP, or $54 billion, the IIF said.

Saudi Arabia, the region's largest economy, could see its real GDP shrink 4% this year and its deficit widen to 13%.

Oman, which is emerging as "an increasingly vulnerable spot in the region in light of its mounting debt" could experience a 5.3% economic contraction while its deficit could widen to 16.1% this year from 9.4% in 2019, the IIF said.