current data suggest. figure 8 : decomposition of the financial account ( annual total, share of gdp ) source : statistics new zealand, rbnz estimates. 8 while this resulted in a material improvement in nfl immediately following the earthquakes, it was subsequently unwound through the current account as reconstruction took place. statistics new zealand ( 2011 ) explains how the insurance claims arising from the canterbury earthquakes have been treated in the international accounts. ref # 7076865 v2. 1 our nfl position can also be significantly affected by revaluations of the stock of domestic and foreign assets and liabilities. figure 9 shows the cumulative value of transactions ( through the financial account ) together with revaluations between march 2009 and march 2017. this figure highlights that revaluations caused by market price changes have played a large role in how our nfl position has evolved since 2009. in particular, the market values of our foreign assets were revised higher to a much greater extent than our foreign liabilities, resulting in a positive net valuation effect. that likely reflects the relatively sharp increase in global equity markets over this period ( including relative to new zealand ), and the fact that equity accounts for a higher share of new zealand ’ s foreign assets than foreign liabilities. were it not for these favourable revaluations, our nfl as a share of gdp would have been about 8 percentage points larger. figure 9 : cumulative contributions of financial account flows and revaluations to new zealand ’ s niip, march 2009 to march 2017 source : statistics new zealand, rbnz estimates. note : additional valuation changes include exchange rate changes, financial derivative valuation changes and other valuation changes. ( ii ) saving and investment perspective figure 10 illustrates the contributions of the government, household and business sectors to the current account. 9 underlying these contributions is what i ’ ll refer to as net saving – the 9 recent statistical developments, including the release of institutional sector accounts, have supported better understanding of sectoral contributions. ‘ business ’ includes producer enterprises ( corporate and non - corporate ), private non - profit institutions serving households and financial intermediaries. producer enterprises make up most of the gross saving and investment in ‘ business ’. ref # 7076865 v2. 1 difference between gross saving and investment in each sector. 10 overall, improved contributions from the business and government sectors have offset the widening gap between household saving and investment in recent years. figure 10 : sectoral contributions to the current account ( march year,

big changes in nfl - gdp in the past, and these appear to have been driven by large swings in the saving and investment behaviour of the various sectors. significant uncertainty remains regarding household behaviour and the contribution of the sector to new zealand ’ s saving - investment gap, and the extent that banks as intermediaries might increase their reliance on offshore funding. as always, the bank will be monitoring these developments closely. we welcome the improvement in new zealand ’ s nfl position since the gfc, but do not see it is a reason to become complacent. ref # 7076865 v2. 1 references bascand, geoff ( 2016 ), “ changing dynamics in household behaviour : what do they mean for inflationary pressures? ”, a speech delivered to the australia national university, 22 november 2016. brook, anne - marie, sean collins and christie smith ( 1998 ), “ the 1991 - 97 business cycle in review ”, reserve bank of new zealand bulletin, 61 ( 4 ), pp. 269 - 290. brook, anne - marie and david hargreaves ( 2000 ), “ a macroeconomic balance measure of new zealand ’ s equilibrium exchange rate ”, reserve bank of new zealand discussion paper, dp2000 / 09. bruneu, gabriel, maxime leboeuf and guillaume nolin ( 2017 ), “ canada ’ s international investment position : benefits and potential vulnerabilities ”, bank of canada financial system review june 2017, pp. 43 - 57. debelle, guy, “ recent trends in australian capital flows ”, speech delivered to the australia financial review banking and wealth summit, sydney, 6 april 2017. fidora, michael, martin schmitz and celine tcheng ( 2017 ), “ reducing large net foreign liabilities ”, european central bank working paper no. 2074 graham, james and daan steenkamp ( 2012 ), “ extending the reserve bank ’ s macroeconomic balance model of the exchange rate ”, reserve bank of new zealand analytical note, an2012 / 08. hargreaves, david and elizabeth watson ( 2011 ), “ sudden stops, external debt and the exchange rate ”, reserve bank of new zealand bulletin, 74 ( 4 ), pp. 17 - 27. holston, kathryn, thomas laubach and john c. williams ( 2016 ), “ measuring the natural rate of interest : international trends and determinants ”, federal reserve bank of