Japan Loses Status as World's Largest Creditor Nation for the First Time in 34 Years, Germany Takes the Lead

At the end of last year, Germany: 5,445 trillion yen, Japan: 5,096 trillion yen, China: 4,935 trillion yen

Germany Reclaims Top Creditor Nation Status with Massive Current Account Surplus Last Year

Japan has lost its status as the world's largest creditor nation for the first time in 34 years. Despite holding a record amount of overseas assets, Germany's growth rate was faster.

According to the Japanese Ministry of Finance's announcement on the 27th (local time), Japan's net external assets at the end of 2024 were 533.5 trillion yen (approximately 5,096 trillion yen), marking a 13% increase from the previous year and a record high. However, during the same period, Germany's net external assets reached 569.7 trillion yen (approximately 5,445 trillion yen), surpassing Japan. China maintained third place with 516.3 trillion yen (approximately 4,935 trillion yen). Japan had held the position of the world's largest creditor nation since 1991, surpassing Germany.

Germany's return to the top creditor nation status is attributed to a massive current account surplus of 248.7 billion euros (approximately 387 trillion yen) in 2024.

The Japanese Ministry of Finance reported that Japan's current account surplus last year was 29.4 trillion yen (approximately 281 trillion yen).

A country's net external assets are calculated by subtracting the value of domestic assets owned by foreigners from the value of overseas assets owned by the country. This figure is adjusted to reflect changes in currency value and essentially reflects the accumulated value of the country's current account balance.

Finance Minister Katsunobu Kato stated that this situation is not a major issue. Minister Kato emphasized to reporters that "Japan's net external assets are also steadily increasing."

Japan has seen an increase in both foreign assets and liabilities due to the weak yen, but assets have increased at a faster rate, driven by expanded investments in overseas companies.

According to Bloomberg, this data reflects the overall trend of foreign direct investment. According to the Japanese Ministry of Finance, Japanese companies significantly increased direct investments, particularly in the United States and the United Kingdom, in 2024. The Ministry stated that Japanese investors have heavily invested in sectors such as finance, insurance, and retail in these countries.

According to Daisuke Karakama, Chief Market Economist at Mizuho Bank, Japan is allocating more funds to direct investments rather than investing in foreign securities. As a result, it has become more challenging to quickly repatriate funds to the home country.

Karakama added, "Selling foreign bonds and securities is easy, but withdrawing investments is not easy when acquiring overseas companies."

It remains uncertain whether Japanese companies will continue to expand their overseas investments, particularly in the United States. With President Trump's tariff policies in effect, some companies may consider relocating production facilities or assets to the United States.

Guest Reporter Kim Jung-ah kja@hankyung.com