In May 2025, Japan’s Ministry of Finance (MoF) reported that Germany surpassed Japan as the world’s largest creditor nation in 2024 for the first time in 34 years (since 1991). Germany’s Net External Assets(NEA) reached Japanese Yen, JPY 569.7 trillion(USD 3.98 trillion) overtaking Japan’s JPY 533.05 trillion (USD 3.73 trillion) in 2024.
- China retained third place with 516.28 trillion JPY(USD 3.3 trillion) in NEA, followed by Hong Kong with JPY 320.26 trillion and Norway with JPY 271.83 trillion.
- As of the end of 2024, the United States of America (USA) remains the world’s largest net debtor nation, with a Net International Investment Position (NIIP) of USD 26.23 trillion.
Note: A creditor nation is a country that owns more foreign assets than it owes to foreign entities, indicating a positive net investment position in the global economy.
Factors Contributing to the Shift:
i.Exchange Rates: The JPY depreciated 11.7% against the USD (year-end rate: JPY 157.89 per USD), inflating Japan’s foreign-currency assets and liabilities. However, Germany benefited from the euro to yen exchange rate increased by around 5% in 2024.
ii.Trade Performance: This shift was driven by Germany’s substantial current account surplus of Euro 248.7 billion in 2024, outpaced Japan’s (JPY 29.4 trillion), reflecting stronger export demand.
iii.Investment Patterns: Japanese firms increased overseas direct investments—notably in the USA and the United Kingdom (UK) finance, insurance, and retail sectors. This shifted capital toward illiquid assets (e.g., corporate acquisitions), reducing repatriation flexibility.
Global Implications:
i.Germany’s rise to the top creditor position underscores its robust trade performance and favorable exchange rate movements.
ii.For Japan, despite record-high overseas assets, the shift highlights the impact of currency fluctuations and investment strategies on its global financial standing.
Key Terms:
1.Net External Assets (NEA):
i.Net External Assets (NEA) represent a nation’s financial position in the global economy. It is calculated as the difference between the total domestic ownership of foreign assets and the total foreign ownership of domestic assets
ii.These assets include foreign investments, bonds, equities, and property holdings.
2.Net International Investment Position (NIIP) refers to the difference between a country’s external financial assets and its external financial liabilities.
About Germany:
President – Frank-Walter Steinmeier
Capital – Berlin
Currency – Euro(EUR)
