• Japan's net external assets reached a record high of ¥533.05 trillion ($3.7 trillion) at the end of 2024.
• Germany overtook Japan with net external assets of ¥569.7 trillion, marking a significant shift in global financial standings.
• The change reflects a robust current account surplus in Germany compared to Japan's smaller surplus amidst a weaker yen.

Japan has officially lost its status as the world's largest creditor nation for the first time in 34 years, falling behind Germany, which reported net external assets of ¥569.7 trillion (approximately $3.98 trillion) at the end of 2024. In contrast, Japan's net external assets stood at a record ¥533.05 trillion ($3.7 trillion), reflecting a 12.9% increase from the previous year. This development signifies a major shift, as Japan had held the title since 1991, and is attributed to a combination of factors including currency valuation adjustments and national surpluses, according to South China Morning Post, Reuters, and AA.

Germany's rise is attributed to a significant current account surplus estimated at €248.7 billion ($283.2 billion) due to strong trade performance, outpacing Japan's surplus of ¥29.4 trillion (approximately €180 billion). The exchange rate played a critical role, with the euro strengthening against the yen, exaggerating differences in reported asset values. While Japan's external assets rose markedly, their liabilities also climbed, reflecting ongoing investments abroad, particularly in the US, according to AA, Reuters, and The Jakarta Post.

The depreciation of the yen has notably enhanced the local currency valuation of Japan's foreign holdings, inclusive of stocks and bonds. Japanese firms have increasingly engaged in overseas direct investments, notably in the finance, insurance, and retail sectors in markets such as the US and the UK, which have contributed to the growth in external assets even as liabilities rose. Experts pointed out that while Japan's net foreign assets are increasing, the fundamental changes in its creditor status suggest a shift in global economic dynamics, as indicated by analysts from India Times and The Jakarta Post.