For the first time in 34 years, Germany is officially the country with the world’s largest net foreign assets. This displaces Japan from the top position the Asian country had held since 1991. But behind this economic success story lies an increasingly explosive reality: While Germany is operating soundly and – despite a seemingly enormous debt level – is stable, other Western industrialized nations such as the USA, France, Italy, and Spain are heading toward serious debt crises. The risk: German assets abroad could be threatened by these countries’ insolvency.
Germany is effectively debt-free – despite €2.5 trillion in national debt
On the surface, German national debt amounts to around €2.5 trillion. That sounds dramatic – but it is put into perspective when one considers the overall economic output, the so-called gross domestic product (GDP). In 2024, Germany’s debt ratio was approximately 64% of GDP. This puts the country in a very solid position by international standards. For comparison:
USA: over 130% national debt ratio (and rising)
France: over 110%
Spain: approximately 105%
Italy: an alarming 137%
While Germany’s debt level is sustainable relative to economic output – especially given its strong export economy and a stable financial system – many other countries have structural deficits, stagnating growth rates, and extreme budget deficits that make debt repayment seem impossible in the long term.
Germany is expanding its net foreign assets
According to the Japanese Ministry of Finance, Japan’s net foreign assets amounted to the equivalent of approximately €3.3 trillion at the end of 2024. Germany significantly exceeded this figure with €3.51 trillion – a historic milestone.
This ratio reflects the difference between a country’s claims on foreign countries and its own obligations. Germany’s strong foreign trade, which led to high current account surpluses for years, has ensured that German companies, banks, and public institutions hold significantly more assets abroad than vice versa.
France, Italy, Spain – The Underestimated Danger of Default
The financial situation of several European countries is worrying – especially Italy. With a debt ratio of over 137%, the country is dangerously close to insolvency. Political instability, stagnating economic growth, an aging population, and high interest rates are making any serious consolidation difficult. An Italian default is no longer a theoretical scenario, but a real threat.
France is also at high risk: its debt level is over 110% of GDP, the economic situation is tense, and the unrest of recent years has raised doubts about the country’s ability to reform. Spain, despite a slight economic recovery, remains on shaky ground with a debt-to-GDP ratio of approximately 105%.
USA: Global Power with Budget Chaos
The situation in the United States is particularly threatening: The debt level now exceeds 130% of GDP – coupled with huge budget deficits and political deadlock. The country is increasingly living on credit. The debt ceiling is regularly raised, and a sustainable austerity program is nowhere in sight. The sheer size of the US economy conceals the fact that a financial meltdown is conceivable at any time.
Warning: German Savers and Investors Are Threatened
What does this mean for Germany? As the world’s largest net creditor, the Federal Republic holds enormous assets abroad – in the form of government bonds, corporate holdings, real estate, and other investments. Should countries like Italy, France, or even the USA experience financial difficulties, massive losses are looming.
In the worst-case scenario, this would mean that German pension funds, insurers, banks, and savers would lose a significant portion of their capital. Such a development would be particularly critical in the event of a default by France or Italy – because many of these claims are held within the Eurozone and thus directly secured by the European financial system.
Conclusion: Germany’s strength is deceptive – security only with global stability
Germany is currently in an excellent position – solid fiscal management, strong exports, and high foreign assets. But these assets are only as secure as their debtors. The increasing financial instability in the USA and large parts of Southern Europe cannot be ignored.
The Federal Republic of Germany does not have to answer for its debts. It should not justify its current status – rather, it should push other countries to rethink their debt policies. Otherwise, Germany could find itself in the paradoxical situation of having to pay for the weaknesses of others, despite its own strengths.
Sources:
Federal Ministry of Finance
Japanese Ministry of Finance
IMF / OECD
Federal Statistical Office
Eurostat
Kyodo News (english.kyodonews.net: “Japan loses status as world’s top creditor for the first time in 34 years”)
