Germany has entered a new era of defense and infrastructure investment, driven by a dramatic shift in fiscal policy and a renewed call for international cooperation amid escalating military tensions, the country’s top envoy to South Korea said Wednesday.
“To enable this shift, Germany passed a constitutional amendment — approved by a two-thirds majority in parliament — allowing greater borrowing flexibility through two special funds totaling an estimated 500 billion euros ($538 billion),” said German Ambassador Georg Schmidt at the Global Business Forum held Wednesday evening in Seoul. The event was organized by The Korea Herald and Herald Business.
One of the new funds is dedicated to defense and security, covering cyber defense, civilian protection and aid to Ukraine. The other targets infrastructure and climate-related transformation, including 100 billion euros earmarked for sustainable projects.
“This is more than just meeting NATO’s goal of spending 2 percent of GDP on defense. It’s about fundamentally rethinking our approach to security,” Schmidt said.
He noted that the shift reflects broader geopolitical concerns — particularly growing uncertainty over US security commitments to Europe and escalating threats from Russia, which he said has effectively transformed into a wartime economy, with around 60 percent of its national expenditure now devoted to military purposes.
Schmidt emphasized that these developments are relevant not only to Europe, but also to countries like Korea.
“Germany’s firm support for Ukraine sends a message not only to Russia, but also to North Korea,” he said.
Schmidt highlighted Korea’s formal defense and security partnership with the European Union, saying it opens the door to future cooperation in emerging security technologies.
At the weekly forum, Kim Yong-sub, founder of Trend Hitchhiking and an independent business insight provider, also spoke about how shifting social values among younger generations are reshaping consumer behavior in Korea.
“We’re now seeing more consumers — particularly those in their 20s and 30s — who no longer view marriage, homeownership or having children as essential life goals,” Kim said. “Instead, they seek meaning through personal hobbies, pet ownership, solo travel or simply choosing to remain single.”
He added that this shift is already reshaping Korea’s economic landscape, with declining demand for products targeting traditional nuclear families and rising sales in sectors like home fitness, pet care, wellness and single-person appliances.
“Companies that continue to target a lifestyle that fewer people aspire to will struggle to stay relevant,” he said.
Next, Chae Sang-wook, CEO of Connected Ground and host of the real estate YouTube channel Chaebushim, provided a macroeconomic perspective on the broader implications of Korea’s record-low fertility rate of 0.75 births in a woman's lifetime.
“This isn’t just a social issue. Fewer births mean a smaller domestic market and shrinking GDP (gross domestic product),” Chae said.
He added that housing market trends already reflect this shift: While the top 20 percent of apartments in Seoul have recovered or surpassed 2021 price levels, the majority remain below prepandemic prices — especially when adjusted for inflation and the Korean won’s depreciation against the US dollar.
Beyond demographics and consumption trends, Chae emphasized the importance of strategic asset planning in an increasingly volatile global environment.
“Investors and businesses alike must develop global awareness and flexibility to navigate the uncertainties ahead,” he said.
flylikekite@heraldcorp.com
