Budget 2013-‘Inflation expected to go down to 5%’ |07 December 2012

Finance, Trade and Investment Minister Pierre Laporte said this in the National Assembly on Tuesday when he delivered his Budget Speech 2013.

On Wednesday the National Bureau of Statistics said slowing food prices slashed Seychelles' inflation to 6.2% year-on-year in November from 7.6% a month earlier.

The bureau said fish prices grew 3.8% compared to 7.9% a month earlier, while food price growth slowed to 4.9% from 5.5%. The two make up 28.8% of the basket of goods used to measure price changes.

On a month-on-month basis, the overall inflation rate was unchanged at 0.1% from October.
Non-food inflation also eased to 6.8% year-on-year from 8.4% a month earlier.

Mr Laporte said: "We remain cautious of the downside risks to the forecasts since, as we have said repeatedly, our economy remains vulnerable to external developments.”

Talking on other factors, Mr Laporte said tourism is projected to grow by 3% in 2013 – “which we expect will be achieved through growth in new markets”.

He said “our biggest economic challenge today is inflation, which is largely impacted by development in international markets”.

“World prices of basic commodities and petroleum products have all increased this year. This was exacerbated by the temporary depreciation of the Seychelles rupee in the first seven months of 2012. This caused inflation to rise to over 9%, however, owing to a tighter monetary policy by the Central Bank of Seychelles it had gradually declined to 7.6% by end of October.

“The European market will continue to be subject of uncertainty but we nevertheless anticipate a modest rebound in 2013.”

He said the information communication technology sector is expected to continue to expand with a full year of benefits from the submarine cable which should lead to technological gains in other sectors of the economy and potentially open new opportunities for investment.

“Despite the challenging global environment we forecast real gross domestic product (GDP) growth of 2.7% compared to 5% in 2011. We have recorded positive performances in most sectors of the economy, including tourism, industrial and semi-industrial fishing, manufacturing, and construction.”

He said other economic indicators affirm that our economy remains strong and resilient and the Seychelles rupee has stabilised against major world currencies following the earlier depreciation.
 
“Our primary fiscal surplus is projected to exceed the targeted level while public debt has fallen to 80% of GDP compared to over 150% of GDP in 2008. Official foreign exchange reserves have continued to grow and we expect it to reach around US $300 million or equivalent of 2.7 months of imports at end-2012. The current account deficit on the balance of payments has remained unchanged at 22% of GDP. Unemployment rate remains below 3% while the number of people on welfare has fallen from 5,000 in 2011 to around 3,500 this year,” said Mr Laporte.