We have experienced Base Rate hikes and cuts on a total of eight occasions, and I would like to know why the Korean financial markets should have changed more frequently than the economies of other countries, given that changes in their policy rates have been made seven times in the same period by the ECB, Russia, China and Turkey, and six times or less by the Philippines, Taiwan, Mexico and Malaysia (setting aside the US, the UK and Japan where no policy rate changes have been made).
First, our growth is driven by domestic demand – both consumption and investment. Consumption and saving are well balanced. In India, the share of private final consumption expenditure in GDP is around 55 per cent. Our savings rate is 37.7 per cent and investment rate is 39.1 per cent. Second, we have twin deficits – fiscal as well as current account deficit.