Economy Japan cedes position as world’s largest creditor for the first time in 34 years

Japan has lost its position as the world's largest creditor nation for the first time in 34 years, having been overtaken by Germany, the Finance Ministry announced on Tuesday. This shift occurred despite Japan's net external assets reaching a record high, a rise partly attributed to the yen's depreciation. As of the end of last year, Japan's gross external assets had increased by 12.9% from the previous year to 533.05 trillion yen (approximately $3.7 trillion), surpassing the 500 trillion yen mark for the first time. However, this total fell short of Germany's 569.65 trillion yen. The ministry explained that the weaker yen inflated the value of Japan's foreign-denominated holdings—including stocks, bonds, and other investments—when converted into yen. Meanwhile, Germany's position was strengthened by its substantial current account surplus.

Japan increased its net external credit for the seventh consecutive year, with total external assets rising 11.4% to 1,659.02 trillion yen, driven by direct investment in the United States by domestic financial institutions and trading houses. External liabilities also climbed 10.7% to 1,125.97 trillion yen, with the ministry saying the U.S. dollar was trading at 157.89 yen as of the end of 2024, up 11.7% from 141.40 yen the previous year. By country and region, Japan ranked as the second-largest holder of net external assets, followed by China with 516.28 trillion yen. The United States, in contrast, had a net external liability of 4,109.26 trillion yen, meaning its foreign debts far exceeded its overseas assets.

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