Global Investment Gap Shrinks Slightly in Q1,2025:The U.S. Bureau of Economic Analysis reported a $1.92 trillion improvement in America’s net international investment position in Q1 2025, bringing the deficit to –$24.61 trillion. This shift was driven by rising foreign asset values, a weaker dollar, and falling U.S. stock prices that reduced liability values. Assets reached $36.85 trillion while liabilities dropped to $61.47 trillion. The update also includes new data on the Federal Reserve’s FIMA Repo Facility and revised figures for 2022–2024. Charts show portfolio investments remain the dominant force on both sides of the ledger.
America’s Global Investment Gap Shrinks Slightly in Q1,2025
The U.S. Bureau of Economic Analysis has released the latest data on the U.S. Net International Investment Position (NIIP) for the first quarter of 2025. The numbers reveal a modest improvement, though the overall position remains deeply negative. As of March 31, 2025, the net international investment position stood at –$24.61 trillion. This marks a $1.92 trillion improvement from the revised –$26.54 trillion at the end of the fourth quarter of 2024.
This improvement came despite net financial transactions amounting to –$277.5 billion. It was mainly driven by net other changes in position, such as price and exchange-rate changes, totaling $2.20 trillion. Price changes contributed $1.73 trillion, largely due to foreign stock prices outperforming U.S. stock prices. Exchange-rate changes contributed $472.5 billion, as the appreciation of foreign currencies against the U.S. dollar boosted the value of U.S. assets more than liabilities in dollar terms.
According to Chart 1, the U.S. net investment position has been in continuous decline since 2016, dropping steeply after 2021, and reaching its lowest around 2024 before recovering slightly in early 2025.
Chart 2 highlights the growing gap between U.S. assets and liabilities. By Q1 2025, U.S. assets had grown to $36.85 trillion, while U.S. liabilities stood at $61.47 trillion. This reflects an increase of $1.13 trillion in assets and a decrease of $792.0 billion in liabilities compared to Q4 2024.
The increase in assets was driven by financial transactions of $548.0 billion, which were largely due to increased short-term U.S. lending abroad in the form of resale agreements. Exchange-rate changes added another $528.4 billion to the asset side, thanks to a weaker U.S. dollar. All major investment categories of assets increased during the quarter, with the exception of financial derivatives.
Chart 3 breaks down U.S. assets by category. Portfolio investment is the largest component, crossing $15 trillion in 2025. Direct investment follows, with other investment, financial derivatives, and reserve assets contributing smaller portions. Portfolio investment showed strong growth from 2016 through 2022, peaking around 2022 and then stabilizing. Direct investment also showed a steady upward trend but saw a slight dip in 2023. Other investment and financial derivatives remained relatively stable, while reserve assets stayed flat throughout the period.
Liabilities, on the other hand, decreased in value largely due to falling U.S. stock prices. This caused a reduction in the market value of direct investment liabilities by $836.4 billion and portfolio investment liabilities by $734.6 billion. These price effects were partly offset by financial transactions worth $844.8 billion. These transactions included foreign purchases of U.S. debt securities and inflows under the category of other investments such as deposits and loans.
Chart 4 illustrates the composition of U.S. liabilities. Portfolio investment continues to dominate, exceeding $30 trillion by early 2025. Direct investment liabilities rose steadily through 2023 before dropping in early 2025. Other investment liabilities showed slow but steady growth, while financial derivatives declined in 2025.
All major liability categories except other investment showed a decline in Q1 2025. Portfolio investment dropped after peaking in late 2024. Direct investment fell sharply, and financial derivatives also saw a reduction.
The report also includes the annual update of the U.S. International Investment Position accounts. As part of this update, the BEA has revised historical data for the years 2022 to 2024 using newly available sources.
An important inclusion in the update is the recognition of transactions and positions related to the Foreign and International Monetary Authorities (FIMA) Repo Facility, established by the Federal Reserve in March 2020. This facility was designed to ease pressures in global dollar funding markets that could have impacted U.S. financial conditions.
The FIMA Repo Facility statistics are now recorded as U.S. deposits in the central bank sector within the other investment asset category. These changes are included starting from 2022 in the International Transactions Accounts and International Investment Position Accounts.
Overall, despite the modest improvement in Q1 2025, the U.S. still holds a highly negative international investment position. The widening over the past decade has been driven by a faster rise in liabilities compared to assets, though Q1 2025 offered some relief due to favorable exchange-rate movements and relative foreign market strength.
Disclaimer: This article is based on data released by the U.S. Bureau of Economic Analysis and is intended solely for informational purposes. All investment positions and financial values are as per BEA’s non-seasonally adjusted figures. This article does not provide investment advice or policy recommendations. Readers are encouraged to refer to official government sources and financial professionals for decision-making.