Question
From the report The prevailing economic conditions suggest that domestic demand may not be too strong [as before] and that's the reason most economists, including
From the report "The prevailing economic conditions suggest that domestic demand may not be too strong [as before] and that's the reason most economists, including us, are looking at Malaysia's gross domestic product (GDP) to contract this year. This, in essence, would reduce imports, and therefore the current account balance would remain in surplus." A twin deficit occurs when a country experiences a deficit in both its budget and current account on the balance of payments. Malaysia has run a budget deficit since 1998, as the total expenditure of successive administrations exceeded total revenue even when oil prices surpassed US$100 a barrel. Fortunately, the current account has provided a measure of comfort in past years, as the country enjoys a surplus, the export of its goods and services exceeding its imports. But should the scenario be reversed, the current account will end up in a deficit and put Malaysia on course for a twin deficit and subsequent consequences, including a weaker ringgit".
Discuss Malaysia economic condition if the situation "twin deficit" stated in the paragraph is happen. Give the best solution to the above situation.
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