World Finance Shifts: Germany Assumes Top Creditor Role from Japan
Germany Supplants Japan as Globe's Largest Creditor Nation
After three decades, Germany has seized the position of the world's largest creditor from Japan, according to Japan's Ministry of Finance. This shift marks a significant milestone, ending Japan's 34-year reign atop the creditor nations.
By the end of 2024, Japan's net foreign assets saw a near 13% year-on-year surge, reaching 533.05 trillion yen, or 3.27 trillion euros. However, this figure was eclipsed by Germany's 569.65 trillion yen (3.49 trillion euros) in net foreign assets.
Japan's government played down the importance of this shift, stating that the increase in Japan's net foreign assets had been steady and that the shift in ranking did not indicate a significant change in Japan's position. Yoshimasa Hayashi, a spokesperson for Japan's Ministry of Finance, explained, "We do not view this change in ranking as a sign of a major shift in Japan's position."
The rise in both Japan's foreign assets and liabilities can be attributed, in part, to a weaker yen. However, the primary driver of the increase in foreign assets was Japanese companies' overseas investments.
Several factors contributed to Germany's rise to the world's largest creditor nation. Robust trade performance led to a substantial current account surplus of €248.7 billion in 2024, far surpassing Japan's surplus of approximately €180 billion. The euro's appreciation against the yen by around 5% in 2024 accentuated Germany's net external asset position compared to Japan. Additionally, there was a shift in global economic dynamics leaning in favor of the eurozone, which likely supported Germany's ascent.
Sources: ntv.de, AFP
- The Commission, which has been involved in the preparation of the report, might have highlighted the role of finance in German businesses, as a significant factor contributing to Germany's rise as the world's largest creditor nation.
- Despite Japan's impressive growth in net foreign assets, the shift in ranking to Germany might have posed challenges for Japanese businesses in securing finance, particularly in the global market, given Germany's new position as the world's largest creditor nation.
