Twin Deficits

When a country runs both a budget deficit and a trade deficit at the same time.

The twin deficits describe a situation where a government spends more than it collects in taxes, a fiscal deficit, while the country also imports more than it exports, a current account deficit. Economists debate how tightly linked the two are, but persistent twin deficits can pressure a currency and raise a nation's reliance on foreign capital.

Economists warned that the twin deficits could weigh on the currency if foreign investors grew less willing to finance the gap.