Japan’s net external assets reached in 2023, a record high of 471.3 trillion ($3 trillion), marking a sixth consecutive year of increase. This growth was driven by a weaker yen and overseas corporate acquisitions, which boosted the value of Japan’s foreign assets, according to the country’s Ministry of Finance.
Japan maintains top creditor status
As a result, Japan maintained its position as the world’s top creditor, followed by Germany with 454.8 trillion yen in net external assets and China with 412.7 trillion yen as of the end of 2023.
Factors driving asset growth
The 51 trillion yen annual increase in Japan’s net external assets was attributed to a weak yen and a rise in direct investment overseas by the Japanese government, businesses, and individuals. Japan’s gross external assets stood at 1,488 trillion yen, while its external debt amounted to 1,017 trillion yen.
Revised current account surplus
The ministry also released revised current account balance data, showing that Japan recorded a current account surplus of 21.4 trillion yen in 2023, up from the preliminary figure of 20.6 trillion yen.
Trade deficit in April
In April 2024, Japan recorded a trade deficit of 462.51 billion yen ($2.94 billion). This was due to higher crude oil prices and a sharp drop in the value of the yen, which increased the cost of imports, despite robust growth in exports.
Slowing core inflation
Japan’s core inflation, which excludes fresh food items, slowed for the second consecutive month in April 2023, reaching 2.2 percent from a year earlier, down from 2.6 percent in March. This likely indicates that the Bank of Japan (BoJ) will be patient in raising interest rates, as consumption remains fragile, despite inflation tracking above the central bank’s 2 percent target. Policymakers are keen to see Japan’s price impulse reflect sustainable domestic demand.
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