The fiscal adjustment also contributed to the dramatic adjustment that took place within the private sector. Households increased their net savings, while firms cut down on their investments, which resulted in a strong trade balance surplus, and a net financing capacity towards the rest of the world. The financial gap was closed.
In less than 18 month the external finance position improved by more than 8%. It must be stressed, that when the crisis hit, countries relying heavily on external funding to finance their growth suffered a more severe recession in 2009, in contrast to those where growth was financed by domestic savings to a greater degree.