Germany’s ascent reflects its substantial current account surplus, which reached €248.7 billion in 2024 thanks largely to a strong trade performance. Japan’s surplus in turn was ¥29.4 trillion according to the finance ministry, equivalent to around €180 billion. Last year the euro-yen rate rose around 5%, exaggerating the increase in German assets versus Japanese in yen terms.
Minister of Finance Katsunobu Kato signaled Tuesday that he was unperturbed by the development. “Given that Japan’s net external assets have also been steadily increasing, the ranking alone should not be taken as a sign that Japan’s position has changed significantly,” Kato told reporters.For Japan, a weaker yen contributed to increases in both foreign assets and liabilities, but assets grew at a faster pace, driven in part by expanded business investment abroad.
The data generally reflect broader trends in foreign direct investment. In 2024, Japanese companies maintained a robust appetite for foreign direct investment, particularly in the US and UK, according to the ministry. Sectors such as finance, insurance and retail attracted significant capital from Japanese investors, the ministry said.
Japan’s increasing allocations of funds to direct investment rather than foreign securities means it’s more difficult to repatriate funds quickly, according to Daisuke Karakama, chief market economist at Mizuho Bank.
“It’s easy to imagine domestic investors selling foreign bonds and securities when risks emerge, but they’re not going to divest from overseas companies they’ve acquired so easily,” Karakama said.
Looking ahead, the trajectory of outbound investment may hinge on whether Japanese firms continue to expand their overseas spending, especially in the US. With President Donald Trump’s tariff policies in effect, some companies may be incentivized to relocate production or transfer assets to the US to mitigate trade-related risks.
