World Power Shift: Germany Replaces Japan as Largest Global Creditor Nation

World Power Shift: Germany Replaces Japan as Largest Global Creditor Nation

Germany Surpasses Japan as Global Creditor Leader

After three and a half decades, Germany has overtaken Japan as the world's largest creditor nation, according to data released by the Japanese Finance Ministry. The shift marks the end of Japan's 34-year reign at the top.

By the end of 2024, Japan's net foreign assets had increased by approximately 13% year-on-year to 533.05 trillion yen (€3.27 trillion). However, this figure fell short of Germany's value of 569.65 trillion yen (€3.49 trillion).

Tokyo played down the significance of the change in rankings, with Yoshimasa Hayashi, spokesman for the Japanese Finance Ministry, stating that Japan's consistent growth in net foreign assets does not indicate a major shift in its position.

The increase in Japan's foreign assets and liabilities was partly due to a weaker yen. However, the majority of the growth in foreign assets was attributed to Japanese companies' overseas investments.

Germany's ascent to the top creditor spot can be attributed to its substantial current account surplus, robust export performance, particularly in the machinery and automotive sectors, and favorable currency dynamics, with the euro appreciating against the yen by around 5%.

Japan faces structural challenges such as persistent deflation, an aging population, and economic stagnation, which have led the country to rely increasingly on offshore investments for growth. These factors, combined with currency volatility and yen depreciation, contributed to Japan losing its top spot to Germany.

Sources: ntv.de, AFP

[Enrichment Data Relevance: Partially relevant. Details about the key factors behind Germany’s rise (such as current account surplus, currency effects, and strong export performance) and Japan’s position (including net external assets growth, yen depreciation, and overseas investment) have been incorporated into the article to provide a more comprehensive understanding.]

The Commission, presumably referring to an economic or financial regulatory body, has also been involved in the preparation of the report detailing Germany's ascendancy to the top global creditor spot, which is attributed to factors such as its substantial current account surplus, robust export performance, and favorable currency dynamics. This shift in global ranking, however, marked Japan's decline in business growth and financial influence, with the country facing structural challenges such as persistent deflation, an aging population, and economic stagnation, leading it to rely increasingly on finance through offshore investments for growth.

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