For decades, Japan’s domestic economy has appeared frozen in time. Stagnant GDP growth, a shrinking workforce, and the relentless march of an aging population have led many to predict the inevitable decline of the Japanese economy. Headlines warn of demographic doom, and charts seem to confirm it.
But this narrative misses a crucial piece of the puzzle: Japan’s massive overseas investment engine.
By the end of 2024, Japan’s net primary income from foreign assets — dividends, interest, and returns — totaled around $200 billion USD, generated from a foreign asset base exceeding $3.8 trillion USD. While only a fraction, roughly 20%, is currently repatriated to the domestic economy, this conservative “take-home” rate is deliberate. It reflects a long-term strategy of reinvestment abroad, and even aligns with Japan’s recent commitment to President Trump to deploy $550 billion in the U.S. over four years.
At first glance, this 20% repatriation — about $40 billion — seems almost negligible. With a fiscal multiplier of 1.5, it contributes less than 0.6% of Japan’s $4.2 trillion GDP, hardly enough to offset the annual 0.7% shrink in the working-age population. But this is just the beginning of the story.
Projected Trajectory Toward Significant Domestic Impact
Below is a projection of Japan’s foreign asset growth, primary income, and potential GDP impact under different assumptions. The table assumes:
Nominal GDP: $4.2T (2024)
Return on foreign assets: 5%
Current repatriation: 20%, increasing to 50% once net foreign assets approach GDP size (~2029)
Fiscal multiplier: 1.7 (slightly higher to reflect targeted stimulus)
Population decline: 0.7% annually
| Year | Net Foreign Assets (T USD) | Primary Income (B USD) | Domestic Repatriation % | Domestic Spending (B USD) | GDP Impact % |
|---|---|---|---|---|---|
| 2024 | 3.80 | 190 | 20% | 38 | 1.54% |
| 2025 | 3.95 | 197.6 | 20% | 39.5 | 1.57% |
| 2026 | 4.14 | 207 | 20% | 41.4 | 1.67% |
| 2027 | 4.33 | 216.5 | 20% | 43.3 | 1.73% |
| 2028 | 4.55 | 227.5 | 20% | 45.5 | 1.80% |
| 2029 | 4.78 | 239 | 50% | 119.5 | 4.83% |
| 2030 | 5.02 | 251 | 50% | 125.5 | 4.97% |
*Simplified graph of how the impact of foreign asset and repatriation rate can affect the domestic GDP.
✅ Notes:
Primary income grows 5% annually on the reinvested foreign assets.
Domestic spending increases modestly while repatriation is 20%, producing small GDP impact (~1.5–1.8%).
- As assets surpass GDP size (~$4.2T), a repatriation increase to 50%, producing a sustainable GDP boost to offset aging affect.