For the first time in 34 years, Japan has lost its status as the world’s largest net creditor to Germany. While Japan’s external assets have reached record levels, the growth of Germany’s assets has been even more impressive. According to figures reported by Japan’s Finance Ministry on Tuesday, the country’s net external assets will stand at ¥533.05 trillion ($3.7 trillion) as of 2024, up 13 per cent from a year earlier. Germany topped Japan with ¥569.7 trillion, and China ranked third at ¥516.3 trillion.
A country’s net foreign assets are the difference between the value of foreign assets held by a country’s residents and domestic assets owned by foreigners. This figure reflects a country’s long-term current account balance and is adjusted for currency fluctuations.
The main reason for the success of Germany was its robust current account surplus, which stood at €248.7bn in 2024 because of its leadership role of exports. In comparison, Japan’s equivalent stood at ¥29.4 trillion (approximately €180bn). The strengthening of the euro against the yen by around 5% also played a role – in yen terms, German assets looked particularly impressive.
So while Japanese assets continue to rise, even faster growth in external demand and export surpluses in Germany and China is beginning to alter the global balance sheet.
Japan has been on top since 1991, when it surpassed Germany for the first time. This position was made possible by many years of current account surpluses and an active investment policy abroad. Today, however, the pattern of investment is changing. Despite the loss of first place, Japan’s Ministry of Finance does not see this as a worrying signal.
The majority of the growth in Japanese assets has been fueled by the weakening yen, which has increased the value of foreign investments. Japanese companies were also still highly concerned with foreign direct investment in 2024. The finance, insurance and retail sectors were particularly in demand.
