World powers switch roles: Germany surpasses Japan as globe's top creditor nation
Germany Claims Leading Creditor Position, Ending Japan's 34-Year Reign
In a significant shift in the global economy, Germany has surpassed Japan to become the world's largest creditor, marking the end of Japan's 34-year reign that began in 1991. The German finance ministry reported a net external asset value of ¥569.65 trillion (€3.49 trillion), outpacing Japan's ¥533.05 trillion (€3.27 trillion).
Japanese authorities, however, downplayed the impact of this development. Yoshimasa Hayashi, spokesperson for the Japanese Finance Ministry, stated that the change in ranking should not be seen as a sign of a major shift in Japan's position, given the steady increase in Japan's net foreign assets.
A weaker yen played a part in the increase in both countries' foreign assets and liabilities. However, government data reveals that the growth in foreign assets was mainly driven by investments by Japanese companies abroad.
The shift can be attributed to several key factors. Germany's robust trade-driven current account surplus, which reached €248.7 billion in 2024, significantly contributed to the accumulation of net external assets. On the other hand, Japan's current account surplus, while considerable, was smaller compared to Germany's.
Moreover, the euro's approximately 5% appreciation against the yen in 2024 further boosted the yen-denominated value of Germany's international assets relative to Japan’s yen-denominated assets.
This transition signifies a shift in global economic dynamics, with Europe's influence rising relative to Japan's. Japan continues to invest abroad, particularly in sectors like finance, insurance, and retail, but Germany's stronger trade surplus and euro appreciation have tipped the balance.
Source: ntv.de, AFP
The Commission, likely referring to the European Commission, has also been involved in the preparation of the report, as the shift in the global economy from Japan to Germany significantly impacts the finance sector and business relationships.
Germany's strong trade surplus and robust current account, coupled with the euro's appreciation against the yen, have bolstered foreign assets of German companies, particularly in the finance, insurance, and retail sectors.
