Latest data released by Japan's Ministry of Finance on Tuesday indicates that, despite Japan's external net assets reaching a record high, by the end of 2024, Japan lost its position as the world's largest creditor nation for the first time in 34 years, overtaken by Germany. This change highlights the significant impact of exchange rate fluctuations and current account performance on a nation's wealth structure.
According to the data, as of December 2024, Japan's external net asset balance stood at 533.05 trillion yen (approximately 3.7 trillion USD), an increase of 13% from the previous year, marking a historical record. However, after conversion, Germany's external net asset balance reached 569.7 trillion yen, surpassing Japan for the first time to become the global leader. China ranked third with 516.3 trillion yen.
Germany's rise was bolstered by its substantial current account surplus. In 2024, Germany achieved a current account surplus of 248.7 billion euros, primarily due to its strong export performance. In contrast, Japan's current account surplus for the same year was 29.4 trillion yen (approximately 180 billion euros), significantly lower than Germany's.
Furthermore, the euro-yen exchange rate rose by about 5% last year, which further expanded Germany's external net assets measured in yen, magnifying its leading advantage in statistical terms. While the yen depreciation increased the book value of Japan's overseas assets, it simultaneously raised the debt asset ratio of foreign investments in Japan, partially offsetting the asset growth advantage.
Specifically, as of the end of 2024, Japan's total overseas assets amounted to 1,659.22 trillion yen, showing an 11.4% growth and marking the 16th consecutive year of increase. Meanwhile, foreign liabilities, referring to foreign assets held in Japan, also grew to 1,125.97 trillion yen, with an annual growth rate of 10.7%, marking the sixth consecutive year of increase.
The Ministry of Finance pointed out that the growth in assets is driven by the continuous expansion of Japanese corporate direct investments globally, especially in the United States and the United Kingdom. In 2024, Japanese companies significantly expanded their presence in finance, insurance, retail, and other sectors, indicating a strong interest in global expansion.
Looking ahead, whether Japan can regain the "top creditor nation" title will largely depend on corporate overseas investment strategies, particularly in the context of potential trade uncertainties brought by new tariff policies under U.S. President Trump's administration. Some companies may opt to shift production capacity or assets to the U.S. to mitigate policy risks, which will directly affect future foreign asset composition.
