Gross fixed capital formation has been growing at annual rates of over 8 per cent for the past three years, driven mainly by private sector investment. In recent years, however, parastatal and public sector investment growth has been extremely low, which accounts for the relatively modest ratio of gross fixed capital formation to GDP of 16,8 per cent in 2005.
Some may argue that either type of financial instability - that associated with the formation and popping of bubbles and that associated with the breakdown of markets or the failure of intermediaries can be incorporated into a policy rule by simply making the rule more forward-looking. The central bank responds to the financial difficulties precisely because they threaten to imperil future economic growth.