Japan has relinquished its position as the world’s largest creditor nation for the first time in 34 years, according to data released today by the Ministry of Finance. Despite a historic rise in its net overseas assets, Japan was overtaken by Germany, whose stronger current account balance and euro-denominated holdings outpaced Japan’s yen-adjusted totals.
As of the end of 2024, Japan’s net overseas assets—the difference between the value of its foreign assets and liabilities—rose 12.9% year-on-year to a record high of ¥533.05 trillion (approximately US$3.7 trillion). This marks the first time Japan’s net overseas assets have exceeded ¥500 trillion. However, this total was insufficient to maintain its long-held status as the top creditor nation, as Germany’s net overseas assets stood higher at ¥569.65 trillion.
The Ministry of Finance attributed the growth in Japan’s net overseas assets primarily to the yen’s depreciation, which increased the yen-converted value of the nation’s foreign currency-denominated assets, including overseas stocks, bonds, and direct investments. The yen weakened significantly, with the exchange rate at ¥157.89 to the U.S. dollar at the end of 2024, compared to ¥141.40 a year earlier—a depreciation of 11.7%.
Despite this foreign exchange-driven boost, Germany’s robust current account surplus gave it the edge. The eurozone giant benefited from substantial trade and income surpluses, reinforcing its position as a key lender to the world.
Japan’s net overseas asset position has continued to expand for the seventh consecutive year, supported by sustained foreign investment activity. Total overseas assets reached ¥1,659.02 trillion, up 11.4% from the previous year. Much of this growth was fueled by Japanese financial institutions and trading companies ramping up direct investment in the United States and other advanced economies.
At the same time, Japan’s overseas liabilities also increased, rising by 10.7% year-on-year to ¥1,125.97 trillion, reflecting greater foreign investment in Japanese markets as well as increased external borrowings by Japanese firms.
The Ministry noted that the favorable valuation effect of the weaker yen played a significant role in inflating the value of Japan’s foreign-held assets. However, this was not enough to counterbalance Germany’s more favorable net position, which remained strong even without such currency effects.
In the global context, Japan now ranks second in terms of net overseas assets, followed closely by China, which holds ¥516.28 trillion in net assets. In stark contrast, the United States remains the world’s largest debtor nation, with net overseas liabilities totaling a staggering ¥4,109.26 trillion, underscoring its deep reliance on foreign capital to finance its economy.
This shift marks a symbolic turning point in global financial standings, highlighting the growing importance of Germany’s external strength and Japan’s evolving role in international finance amid ongoing currency volatility and structural economic changes.
Published on 30/05/2025
By Michael S.