TOKYO - Japan’s net foreign assets hit a record high at the end of last year, but the country has fallen from the top global position for the first time in 34 years, according to data released by the Ministry of Finance.
The balance of net foreign assets—which subtracts external liabilities from the total value of overseas assets held by the government, corporations, and individual investors—stood at 533.05 trillion yen as of the end of December 2023. This marked a 12.9% increase from the previous year and the sixth consecutive annual record, surpassing the 500 trillion yen mark for the first time.
Despite the historic figure, Japan was overtaken by Germany, dropping to second place globally in net external wealth.
Japan's accumulation of net foreign assets has been a defining feature of its postwar economic trajectory. Following the rapid economic growth of the 1950s through the early 1970s, Japan began amassing trade surpluses driven by strong exports in automobiles, electronics, and machinery. These surpluses were reinvested overseas, gradually increasing the nation's stock of foreign assets. In the 1980s, Japan’s net foreign assets surged further, particularly after the 1985 Plaza Accord, which led to a sharp appreciation of the yen. As Japanese companies faced rising costs domestically, they expanded aggressively abroad, acquiring real estate, corporate assets, and government bonds. This wave of outbound investment helped Japan surpass the United States in 1991 to become the world's top creditor nation—a status it would hold for the next three decades.
Through the 1990s and 2000s, even as Japan’s domestic economy stagnated following the collapse of the asset bubble, the current account remained in surplus, supported by income flows from foreign investments. Japanese institutional investors, especially pension funds and life insurers, increased their holdings of overseas assets in search of higher yields amid persistently low interest rates at home. The country’s manufacturing sector also maintained strong export performance, contributing to the steady buildup of foreign reserves and investment income. By the 2010s, Japan's net foreign assets consistently topped global rankings, with large positions in U.S. Treasury securities, European bonds, and emerging market equities.
In recent years, the trend continued with rising investment income offsetting declining trade surpluses. The weakening yen—especially after 2022—boosted the yen-denominated value of Japan’s foreign assets, further expanding the net balance. By the end of 2023, Japan's net foreign assets reached a record 533.05 trillion yen. However, despite this nominal high, Germany overtook Japan as the world’s largest net creditor. This shift was partly due to exchange rate effects, stronger European export performance, and rising asset values held by German investors. Japan’s fall to second place in 2023 marked the end of a 34-year reign at the top, underscoring how shifts in currency values and global capital flows continue to reshape the landscape of international financial power.
Source: テレ東BIZ
