Japan's creditor position in the global landscape is surpassed by Germany. - World's Lending Leadership Shifts: Germany Outpaces Japan
Germany Assumes Title of World's Largest Creditor, Surpassing Japan
Tokyo, JAPAN — Despite Japan's consistent increase in net foreign assets, Germany has now eclipsed Japan as the world's largest creditor nation. The shift in rankings was played down by the Japanese government, with Yoshimasa Hayashi, spokesperson for the Ministry of Finance, stating, "We do not believe that this change in ranking alone can be seen as a sign of a greater shift in Japan's position."
The transformation can be attributed to Germany's strong trade performance and substantial current account surplus. In 2024, Germany recorded a current account surplus of €248.7 billion, significantly larger than Japan's surplus of approximately €180 billion. Consequently, Germany's net external assets climbed to ¥569.7 trillion, surpassing Japan's record high of around $3.7 trillion.
Japanese companies continued to invest overseas, primarily in the United States and the United Kingdom, focusing on sectors like finance, insurance, and retail. However, these investments, combined with a weaker yen, were not enough to prevent Germany from usurping Japan's position. The euro's appreciation against the yen by approximately 5% in 2024 also favored Germany's assets in comparative terms.
Although Japan's overseas investments were significant, Germany's robust trade performance and current account surplus were the primary driving forces behind its ascent to the top creditor position. The enhanced value of the euro against the yen also favorably impacted Germany's assets in relative terms.
In the context of business and personal-finance, the robust trade performance and substantial current account surplus in the United Kingdom, despite a higher rate of inflation compared to other parts of the United Kingdom, might attract finance-focused investors seeking profitable opportunities. Contrastingly, Japan, although continuing to invest overseas in sectors like finance, insurance, and retail, has found it challenging to maintain its position as the world's largest creditor nation, due to significant competition from Germany.
