What Happened?

For the first time in 34 years, Germany has overtaken Japan as the world’s largest creditor nation in terms of net external assets — the total value of a country's foreign assets minus its foreign liabilities.

Net External Assets?

Net external assets = Foreign assets held by residents and institutions − Liabilities to foreigners

This includes:

• Foreign direct investments
• Portfolio investments
• Loans and deposits
• Reserve assets

DATA

As of the end of 2024, Japan's net external assets reached a record Japanese Yen ¥533.05 trillion or 3.7 trillion dollars, marking a 12.9% increase from the previous year.

However, Germany surpassed Japan with net external assets totaling ¥569.7 trillion ($3.98 trillion), propelled by a substantial current account surplus of €248.7 billion ($283 billion) in 2024, largely due to robust exports of machinery and automobiles. 

This growth was driven by a weaker yen and increased overseas investments by Japanese companies.

China remained in third place with net external assets of ¥516.3 trillion ($3.62 trillion). 

Country Net External Assets

1. Germany ¥569.7 trillion ($3.98 trillion)
2. Japan ¥533.05 trillion ($3.7 trillion)
3. China ¥516.3 trillion ($3.62 trillion)

REASONS?

1. Massive Current Account Surplus : Germany had a current account surplus of €248.7 billion ($283 billion) in 2024. Driven by strong exports of machinery, automobiles, and precision tools.
2. Yen Depreciation : The weak Japanese yen reduced the value of Japan's foreign assets in yen terms. Even though Japan’s external assets grew, their yen-denominated value was eroded.
3. Stable Euro vs. Volatile Yen : Germany benefited from a more stable euro, while Japan’s currency volatility worked against its asset valuations.

Why This Matters Globally?

Japan's status as the top creditor was seen as a symbol of its economic might post-bubble era. Germany’s rise signals its surplus-driven economic strength, especially amid geopolitical trade shifts. The shift also reflects currency dynamics and relative competitiveness of exporting economies.

Japan may face pressure to stabilize the yen and recalibrate its investment strategy abroad. Germany gains more influence in global financial negotiations and IMF positioning. The shift also hints at Asia’s relative cooling in capital accumulation, with Europe regaining momentum.