From political gridlock to economic shifts, Estonia appears to be experiencing a number of challenges according to Triniti Managing Partner Ergo Blumfeldt, who reports unprecedented parliamentary obstructionism, a budgetary deficit prompting new tax laws, and a legal sector experiencing stagnant growth amid broader economic uncertainties.
“Estonia is facing considerable challenges at present, particularly in our parliamentary process,” Blumfeldt begins. “We're witnessing unprecedented levels of obstructionism and ideological divides, making it difficult to advance legislative initiatives. This situation is quite unusual for Estonia,” he shares.
Indeed, there seem to be issues aplenty. “Estonia has historically prided itself on maintaining a balanced budget,” Blumfeldt continues. “However, we've recently run a deficit, leading the government to become more experimental in introducing or trying to introduce new taxes – this includes taxes on cars and the failed introduction of bank windfall profits taxes. It marks a shift from our simple tax system to a more complex one, which is causing some confusion and concern,” he explains.
Blumfeldt also reports that “the legal sector saw growth in 2022, but the first two quarters of 2023 have shown no growth in law firm billables. Moreover, the top law firms are experiencing a slight decline, with the top 15 law firms recording in total a 4% reduction in turnover Q3 to Q2 of 2023,” he says. “We're also seeing fewer IPOs compared to the first half of 2022. The market is apprehensive, with signs reminiscent of the previous crisis,” he adds wearily.
However, not all is gloomy. “The energy sector, especially renewable energy, is thriving,” Blumfeldt says. “Several wind parks have been launched recently and the agricultural sector is also doing well.” On the other hand, he points out that “the IT sector, which Estonia is known for, is experiencing a slowdown with significant layoffs and reduced inbound investments.”
Finally, Blumfeldt reports there is a “significant focus on – and rise of – media and data protection disputes currently. The government plans to introduce a law criminalizing hate speech, which is sparking heated debates about media freedom,” he adds. “This seems to be part of an EU trend, but its implementation in Estonia has been delayed,” he says in conclusion.
