The net international investment position of Japan increased last year by 12.9% year-on-year, reaching 533.05 trillion yen (3.28 trillion euros), surpassing 500 trillion yen (3.08 trillion euros) for the first time, yet falling short of Germany’s external assets, which stood at 3.5 trillion euros by the end of 2024, according to the German central bank.
The depreciation of the yen enhanced the value of Japan’s foreign currency-denominated assets, including stocks, bonds, and other investments once converted to the local currency, but effectively reduced the net asset amount, stated Japan’s government spokesperson, Yoshimasa Hayashi, at a press conference.
The weakening yen contributed to the rise of both external assets and liabilities, yet assets grew at a faster rate, driven partly by the expansion of Japanese business investments abroad.
Overall, the data reflects broader trends in foreign direct investment. In 2024, Japanese companies maintained a strong appetite for foreign direct investment, particularly in the United States and the United Kingdom, according to the ministry.
Sectors such as finance, insurance, and retail attracted significant capital from Japanese investors, as reported by the ministry.
Germany also benefited from a high current account surplus last year, amounting to 248.7 billion euros.
Tokyo’s current account surplus stood at 29.26 trillion yen (180.22 billion euros) in the same period.
Hayashi downplayed the significance of this figure, emphasizing that Japan’s position in this area remains strong: “Net assets are increasing despite the global ranking, as Japan’s [economic] situation has not changed,” he said.
Germany displaced China as the second-largest creditor globally in 2015, when the Asian country made a heavy investment to curb the depreciation of the yuan.
In 2023, the European country relegated Japan to the fourth-largest economy in the world.
The report from Japan’s Ministry of Finance, released today, shows that the country’s net external credit rose in 2024 for the seventh consecutive year, increasing by 11.4% year-on-year, with total assets at 1,659.02 trillion yen (10.23 trillion euros), driven by direct investment in the United States by financial institutions and trading houses.
External liabilities rose by 10.7% to 1,125.97 trillion yen (6.94 trillion euros).
The yen was quoted at 157.89 against the US dollar at the end of 2024, 11.7% lower year-on-year.
Looking ahead, the trajectory of foreign investment will depend on whether Japanese companies continue to expand their investments overseas, especially in the United States.
With President Donald Trump’s tariff policies in effect, some companies might be encouraged to relocate production or transfer assets to the United States to mitigate trade-related risks.
