Japan Loses World's Top Creditor Position to Germany After 34 Yrs

Japan lost its position as the world's largest creditor country for the first time in 34 years, despite having a record amount of overseas assets.

Key Highlights

• Despite a 13% increase, Japan's net external assets were surpassed by Germany's ¥569.7 trillion.
• Germany's €248.7 billion current account surplus in 2024 contributed to its rise in creditor rankings.

According to data released Tuesday by the Ministry of Finance, Japan's net external assets at the end of 2024 totaled ¥533.05 trillion ($3.7 trillion), an increase of about 13% from the year before. With net external assets of ¥569.7 trillion, Germany surpassed the previous record. With ¥516.3 trillion in net assets, China was still in third place.

Germany's impressive current account surplus, expected to reach €248.7 billion in 2024, is primarily the result of strong trade performance. The finance ministry of Japan reported a surplus of ¥29.4 trillion, or roughly €180 billion.

Last year, the euro-yen rate rose by about 5%, exaggerating the increase in German assets versus Japanese assets in yen terms.

A weaker yen boosted both foreign assets and liabilities in Japan, but assets grew faster, due to increased business investment abroad.

The information reflects more general foreign direct investment trends.According to the ministry, Japanese businesses were still eager for foreign direct investment in 2024, particularly in the US and the UK. The ministry claims that Japanese investors have made large investments in sectors like finance, insurance, and retail.

Whether Japanese businesses continue to spend more overseas, particularly in the US, may determine the future course of outbound investment. With President Donald Trump's tariff policies in place, some companies may be incentivized to relocate production or assets to the United States in order to mitigate trade risks.