AFT 1093

MACROECONOMICS
FEBRUARY
(SESSION 2021/2022)

CASE STUDY

LECTURER'S NAME: MADAM NIK MADEEHA BINTI NIK

MOHD
MUNIR
TUTORIAL GROUP & SUB-GROUP: L4T1 (GROUP 4)
PRESENTATION LINK:
GROUP MEMBERS MATRIC NO.
NURAIN SYAHIRAH BINTI ROZALI A20A1808
NUR ASSMIERA BINTI BAHARUDIN A20A1687
NUR NADILA HARYANI BINTI ANUAR A20A1762
NUR SYAHIRAH BINTI AMINUDIN A20A1784
SITI NOR ZAFIRAH BINTI MUSTAZA A20A1968
 RUBRIK DHP KKM5: KEMAHIRAN PENYELESAIAN MASALAH (25 MARKAH) – AFT1093

Atribut Subatribut Sangat lemah Lemah Memuaskan Baik Sangat Baik Weight TOTAL
(1 mrk) (2 mrk) (3 mrk) (4 mrk) (5 mrk)
Kenal Tidak boleh mengenal Boleh mengenal pasti dan Boleh mengenal pasti Boleh mengenal pasti dan Boleh mengenal pasti dan
Pasti pasti dan menerangkan masalah dan menerangkan menerangkan masalah dengan menerangkan masalah ____ x 1
Masalah menerangkan masalah dengan bantuan yang masalah dengan sedikit tepat dan jelas tanpa bantuan. dengan sangat tepat,
walaupun dengan maksimum. bantuan. terperinci dan jelas. (max: 5)
bantuan.
Tidak boleh menyusun Kurang berkemampuan Boleh menyusun dan Boleh menyusun dan Boleh menyusun dan
Analisis dan menganalisis data menyusun dan menganalisis menganalisis data atau menganalisis data atau menganalisis data atau ____ x 2
atau maklumat yang data atau maklumat yang maklumat yang dicerap/ maklumat yang dicerap/ maklumat yang dicerap/
dicerap/ didapati dan dicerap/ didapati dan tidak didapati tetapi kurang didapati, boleh mengenal pasti didapati, boleh mengenal (max: 10)
Penyelesaia tidak berjaya mengenal berjaya mengenal pasti berjaya mengenal pasti faktor yang menyumbang pasti faktor yang
n Masalah pasti faktor yang faktor yang menyumbang faktor yang kepada masalah/ isu atau menyumbang kepada
menyumbang kepada kepada masalah/ isu atau menyumbang kepada boleh menerangkan punca masalah/ isu dengan tepat
masalah/ isu atau menjelaskan punca masalah. masalah/ isu atau tidak masalah. atau boleh menerangkan
menjelaskan punca menerangkan punca punca masalah dengan
masalah. masalah dengan jelas. jelas.
Tidak boleh Boleh mengaplikasi sedikit Boleh mengaplikasi idea/ Boleh mengaplikasi idea/ ilmu Boleh mengaplikasi idea/
Aplikasi mengaplikasi idea/ idea/ ilmu baharu kepada ilmu baharu kepada baharu kepada masalah yang ilmu baharu kepada ____ x 1
(Rumusan) ilmu baharu kepada masalah yang diberi. masalah yang diberi diberi tanpa sebarang masalah yang diberi serta
masalah yang diberi. dengan bantuan rakan bantuan. mencadangkan aplikasi (max: 5)
atau pensyarah. alternative.
Tidak boleh Boleh mengaplikasi format Boleh mengaplikasi Boleh mengaplikasi format Boleh mengaplikasi format
Aplikasi mengaplikasi format mengikut panduan yang format mengikut dengan tepat mengikut dengan tepat sepert ____ x 1
(Format) walaupun panduan diberi dengan beberapa panduan yang diberi panduan yang diberi tanpa ipanduan yang diberI
telah diberi. kesilapan. dengan sedikit kesilapan. sebarang kesilapan. dengan persembahan yang (max: 5)
kreatif dan menarik.
 CASE STUDY: QUESTION 3

Daripada laporan "Keadaan ekonomi semasa melihat bahawa permintaan domestik

mungkin tidak terlalu kuat [seperti dahulu] dan itulah sebabnya kebanyakan ahli
ekonomi, termasuk kami, sedang melihat kepada keluaran dalam negara kasar
(KDNK) Malaysia akan menguncup tahun ini. Keadaan ini pada dasarnya, akan
mengurangkan import oleh itu baki akaun semasa akan kekal dalam lebihan." Defisit
berkembar berlaku apabila sesebuah negara mengalami defisit dalam kedua-dua
bajet dan akaun semasa pada baki pembayaran. Malaysia telah mengalami defisit
belanjawan sejak 1998, memandangkan jumlah perbelanjaan pentadbiran melebihi
jumlah hasil walaupun harga minyak melepasi US$100 setong. Mujurlah, akaun
semasa telah memberikan ukuran keselesaan pada tahun-tahun yang lalu, kerana
negara menikmati lebihan, eksport barangan dan perkhidmatannya melebihi
importnya. Tetapi sekiranya senario itu diterbalikkan, akaun semasa akan berakhir
dalam defisit dan meletakkan Malaysia pada situasi untuk mengalami defisit
berkembar dan akibat berikutnya, termasuk ringgit yang lebih lemah.

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”.

Bincangkan keadaan ekonomi Malaysia jika situasi “deficit berkembar” yang

dinyatakan dalam perenggan itu berlaku. Berikan penyelesaian terbaik kepada
situasi di atas.
Discuss Malaysia economic condition if the situation “twin deficit” stated in the
paragraph happens. Give the best solution to the above situation.
(12 markah/ marks)
 ECONOMIC CONDITION IN MALAYSIA IF THE "TWIN DEFICIT"
SITUATION OCCURS

A twin deficit is often referred to as a double deficit. When a country has a

combined current account and budget deficit. When government expenditure
exceeds government receipts, fiscal deficits or budget deficits develop. It is a
circumstance in which the expenditure surpasses the budgeted amount. A twin deficit
is often referred to as a double deficit. When a country has a combined current
account and budget deficit. When government expenditure exceeds government
receipts, fiscal deficits or budget deficits develop. It is a circumstance in which the
expenditure surpasses the budgeted amount. The current account is also known as
the government's account to the balance of payments. This account is meant to
record anything relating to each country's net imports and exports.
The current account deficit develops when the value of the country's exports
exceeds the value of its imports. However, there is no reason why current account
and government budget deficits should exist concurrently. The phrase "twins deficit"
refers to the link between a country's current account deficit and budget deficit. Both
incidents must occur at the same time to be considered a "twin deficit". A country that
has a double deficit owes money to the rest of the globe. A double deficit may
damage the country's currency in the long run.
If such a situation arises in Malaysia, it will have a detrimental impact on the
country's economy and will significantly depreciate the Malaysian ringgit (RM),
making it less valuable than currencies in other wealthy nations. Investors will also be
less confidence in purchasing stocks or investing in Malaysia if the value of imports
exceeds the value of exports.
The implications of the "twins deficit" are anticipated to be a devaluation from
the current account deficit due to increased demand for imports from adjacent or
strong economies. This puts Malaysia at danger of currency devaluation, which will
result in inflation. A current account deficit may also be indicative of an uncompetitive
economy in current business. If there are too many demands against imported
products, Malaysia will struggle to enhance its position in the Malaysian ringgit (RM).
We have shown that if the double deficit is not handled, it will produce a drop in
national revenue from time to time.
Following that, debt will rise as the twin deficit becomes increasingly
uncontrollable. If the government has raised funds from the previous year's surplus
and must finance it with debt. When the government's debt grows, it has an impact
on the government's finances and emergency accounts as a result of events that
should not have occurred. As a result, the government was forced to borrow money
by issuing bonds to secure investors like private investors. The Malaysian
government must also find solutions to this problem so that the increase in domestic
debt can be reduced without causing deficits or inflation.
As stated in the paragraph above, a decrease in demand for export products
and services has resulted in a decrease in output and will lead GDP to drop. The
service and manufacturing sectors must cut output until the gross domestic product
(GDP) falls. According to the research, current account deficits will arise. Malaysia
would run a double deficit, and its currency will be weaker and lower than that of
wealthy countries.
The effect of the twin deficit in budget or fiscal deficit is the consequence of
congestion out. In Malaysia, the deficit is considered in government budget planning
to guarantee that government expenditure does not exceed the existing financial
amount and must follow the current circumstances. Share fascinating investments in
government bonds, equity securities, and other forms of debt in local currencies
currency, and the government will take the initiative to obtain cash to meet
expenditures.
According to the most new analysis, the country still had a current account
surplus of 2.7 percent of GDP in the first half of 2018. Furthermore, the Federal
Government's fiscal deficit in the first half of 2018 was RM30.8 billion, or 4.5 percent
of the value of GDP (GDP). Nonetheless, Malaysia is still classified as a country that
does not face the problem of twin deficits, which is a very stressful situation when
there is a large outflow of funds.
 ACTIONS THAT CAN BE TAKEN TO RESOLVE
THIS SITUATION

Among the first steps the government will take in the event of a double deficit
is to continue to optimise spending and reorganise development projects based on
priorities. A significant investment or budget for the project must be considered. If the
project's investment exceeds the profit, it will result in a wasted investment with a
profit that is not worth it. This matter requires proper organisation for project
management. The beginning of a project with a limited budget should be prioritised
and the necessary steps taken. If it is as well organised as possible, the loss in
investment will not have a significant impact on the government's account.
Furthermore, Malaysia can increase the inflow of investment income by
encouraging profitable Malaysian investment abroad. As a result, the trading account
can be improved indirectly. For example, the government may present a project that
is attractive to foreign investors, such as a collaboration between two countries in a
relevant project.
Third, the government can launch initiatives to boost the export and tourism
industries, as well as private investment and consumption. Malaysia must rethink its
domestic policies in order to reduce its reliance on imported goods from other
countries, while also focusing on the export of Malaysian goods. Malaysia can
indirectly reduce the percentage rate in the double deficit if it exports many goods. In
addition, Malaysia's current account balance will remain positive.
Fourthly, tourism development must be prioritised. The Malaysian
government can advance the tourism industry by collaborating with neighbouring
countries, such as launching the Thai Food Festival and the International Book
Festival, which can attract interest and encourage foreign tourists to visit Malaysia.
The government must also improve the tourism sector or create more places of
interest in Malaysia so that many foreign tourists will want to visit. However, domestic
community support is also critical for increasing profits in Malaysia.
The Malaysian government can also take initiatives such as encouraging
residents to use public transportation. Financial inflows and outflows will occur more
frequently as a result, as will profits and the ability to cover the finances in the event
of a double deficit. Then, the government can promote the use of local transportation
in the local delivery system. Exporters can use local transportation in international
transactions. It can also improve efficiency in the management of export goods.
 Next, held what we call state tax reform Unnecessary taxes can be
eliminated. For example, the Pakatan Harapan (PH) government imposed seven new
taxes while raising only three old ones to replace one, GST. Sales tax, service tax,
digital tax, soda tax, relief tax, parcel tax, and property gains tax (RPGT), stamp duty,
and assessment tax are among the taxes. However, tax revenue is still insignificant.
We need to overhaul the tax system so that it does not burden the people. It should
also be noted that the current state of the country must be considered before
implementing this, as well as the people's readiness. If we do not want more GST,
we can implement value added taxes.
In conclusion, the government should always be concerned about the double
deficit and ensure that the government's current account is in good shape. The
Malaysian government must ensure that the budget released does not exceed the
set rate to ensure that total administration expenditure does not exceed total
revenue. As a result, total exports of goods and services must exceed imports to
avoid market imbalances that harm the national economy, such as the occurrence of
a double deficit. Nonetheless, as Malaysians with a strong sense of unity, we should
support any government initiative that will help the Malaysian government succeed. It
also aids Malaysia's progress.