Guido Pärnits: Purchasing power is recovering, but unnecessary panic is being created ahead of the elections

The second-quarter results of Ülemiste Center show that after the sales decline in March, the situation has begun to stabilize, and in several product categories, consumption has started to rise again. The centre’s Director, Guido Pärnits, emphasizes that the pre-election and largely exaggerated panic around the increase in VAT unnecessarily spread to consumers and negatively affected purchasing behaviour.

“It can undoubtedly be said that the elections taking place in October do not benefit Estonian retailers. The parties have turned criticism of the government and its decisions into panic. Fear of the future makes people cautious, which is why they deliberately spend less money in stores,” said the Director of Ülemiste Center Guido Pärnits. 

Since Ülemiste is one of the largest shopping and entertainment centre in the entire Baltic region, its turnover figures serve experts as an alternative indicator for assessing the state of the economy. While in January, February, and March 2025 sales declined in most product and service categories, in April, May, and June the decline slowed down and, in some segments, even turned into growth. 

“Although overall turnover in the second quarter decreased by about a couple of percent, there was a very strong growth of 5% in the restaurant sector. This means that compared to last year, people spent more money in restaurants and cafés,” noted Pärnits. “The decline continued in the clothing category, but an important factor here was that since early June, our largest clothing store, H&M, has been closed for renovation.” 

Having worked in retail for over 30 years, Pärnits believes that the March sales bottom has now been passed and that retailers have again become more optimistic about the future. “The picture would be even more optimistic if the parties showed more responsibility in their pre-election rhetoric and did not constantly fuel the narrative that everything is bad in Estonia and will only get worse,” said Pärnits. “There have been very uncertain times globally for many years already. The increase in turnover tax was certainly not the bogeyman it was portrayed as in the public space. The state needs to be maintained, and this was unjustified panic-mongering.” 

According to Pärnits, Estonian retailers in general deserve gratitude for managing to survive difficult times and daring to look to the future with greater optimism: “Estonia is unfortunately a small country with fewer consumers. Any major global crisis or internal change affects this small consumer base and their purchasing power. The number of tourists still hasn’t reached previous peaks. In addition, the weather is unpredictable — there was no winter, and summer has still not properly begun. I truly take my hat off to Estonian retailers.” 

Since local elections will only take place in October, Pärnits urges politicians to stop spreading panic. “All signs indicate that Estonians’ purchasing power is finally recovering this year. However, it is very easy to damage this optimism with irresponsible statements aimed at winning votes. I would like to see a more responsible election campaign,” he added.