Although the coronavirus is still ongoing, new records are being set in different areas every week, even exceeding pre-crisis period results. Estonians are living better than ever, but it's important to ask when will the bubble break.
With the Black Friday sales, a huge shopping party will last until Christmas. Although merchants didn't organize huge campaigns, it's difficult to find a parking spot in a front of a shopping mall. Estonians can and are consuming, ETV's daily affairs show "Aktuaalne kaamera" reported on Sunday.
"We didn't believe that people would rush to stores after closing the shopping malls and society and them opening again. People still have this so-called consuming hunger. The salaries are rising, and people seem to have money to spend. The feeling is that Christmas will be great," head of the Ülemiste Center Guido Pärnits.
"What we're all witnessing together is an unprecedented salary increase, which has been ongoing for six-seven years. I just checked that in 2014, the average salary exceeded €1,000 and last year, it temporarily exceeded €1,500 and again this year so we've seen an increase of 50 percent. There's been inflation, but not as high," Swedbank Estonia head Olavi Lepp.
Not only salaries are increasing. Almost everything is increasing in Estonia's economy.
"When we look at all of these indicators - trade growth, construction, industry - everything is booming when we leave aside a couple of sectors such as the accommodation and transport sector," the economic advisor to the prime minister Ardo Hansson said.
Hansson highlights Estonia's good neighborhood as one of the nuances of the country's economic success.
"Our main trading partners did not do very badly and I think the third factor was one sector - IT - was certainly the big winner that happened to be very important to us and has been largely driven by this growth," Hansson said.
One example of a booming economy is that real estate prices have soared as skyscrapers. For example, a 120-square-meter apartment for €750,000 is for sale in the Volta quarter under development. It is not the only one of its kind in Tallinn, nor is it the most expensive on offer.
"Everyone is borrowing money and this money is entering the Estonian economy in one way or another. A good example is the sale of Pipedrive (cloud-based software as a service company - ed.), where 50 new millionaires were created in Estonia, that money is reaching the apartment market, reaching the retail market, reaching everything. This is just one example, I think that more money will come because Estonia's start-ups are doing well," construction entrepreneur and investor Jaanus Ots said.
"There's currently an excess of money, we have too many deposits in the system compared to loans, and deposits are a cost for us in today's interest rate environment because as a whole we have the ability to borrow more than we may have had these good projects," Swedbank Estonia director Olavi Lepp said.
The question is whether the central banks have suddenly printed too much money and whether it is now finally entering the economy too extensively and leading to a rapid rise in prices.
"Yes, there was once talk about the ketchup bottle effect, that if you shake it and it doesn't come out at first, everything will later come out at once. It can have an effect, but I think there are also opportunities for retaliation," Hansson said.
However, the prices of various assets have reached records in recent years.
"Every place with very big growth has big winners, but at some point there may be a lot of painful losers," Lepp said.
Inevitably, this all will end at some point. A situation where everything is always different has never remained. Just no one knows when and where that change will come from.
"There are a lot of predictors who are forecasting the form of the next crisis and only some of them are right," Olavi Lepp said.
"On the one hand, the crisis is a catastrophe in a small way. But on the other hand, it is also a great opportunity for real estate businessmen. If we say that real estate prices are high currently, some may even be unexpectedly high, then the prices of several plots will fall in the next crisis, believe me," Jaanus Ots said.
"I don't want to buy any plots today, but I definitely would then. I've bought them - when there's been a crisis. You don't have to be very smart here, as Warren Buffet says: sell when your cab driver is buying and buy when there is blood on the streets" Ots said, adding that he has sold a lot of property during the crisis.
Whatever happens in the future, Estonia would be able to cope with persistent inflation and higher interest rates.
"We have these buffers, fortunately. For decades we were actually conservative, but some other country that actually has less room to maneuver, and if even higher interest rates are added now, it could, of course, bother them if they have to make hard decisions," Hansson said.
Editor: Roberta Vaino