World Bank classification - Seychelles achieves ‘high-income’ status |03 July 2015

Seychelles' economic progress has been recognised by the World Bank as it graduated to the status of ‘high-income’ country this week within the World Bank classification.

President James Michel has welcomed the news but has however highlighted the importance of looking at development beyond the reductive practice of simply measuring gross domestic products (GDP) per capita.

He has reiterated the importance of addressing the specific concerns of small island developing states (Sids) and in particular the need to couple all measures of development in the context of countries’ vulnerability such as through a vulnerability index.

“Today Seychelles’ immense progress through its commitment to reform has been recognised as we have graduated to high-income status. Our achievements have been recognised by the world community.

After 39 years as an independent nation, we are now classified as ‘High-Income,’ which we have managed to achieve with confidence and determination in developing our economy in the last few years.
 
A combination of factors has enabled us to achieve this graduation, not least, the successful economic reform programme undertaken since 2008, the diversification of our economy and the growth of investment in tourism. The hard work, resilience and innovation of the Seychellois people have brought results and we are committed to continue on this path. We have achieved this together. And if we all continue to work together we can achieve much more for our country and people,” said President Michel.

The President has also taken the opportunity to reiterate the call for more targeted support for Sids through measures such as a vulnerability index, as he advocated at the Third International Conference on Small Island Developing States in Samoa in 2014.

He stressed that 'high-income status' should not be a means to exclude countries like Seychelles and other Sids from legitimate development tools that allow them to adapt and build resilience against both the vagaries of the global economy and climate change.

"Seychelles has made huge strides to build its economic resilience and this is recognised by this graduation. But we remain highly vulnerable to environmental shocks such as climate change, as well as being very vulnerable to global economic swings. We have reached an income status equivalent to many OECD countries – but we don't have the same access to developmental tools including affordable finance as these countries have. As we recognise this milestone I call on all our development partners not to penalise us for our success,” said Mr Michel.

President Michel has in the past expressed confidence in Seychelles’ ability to achieve this status. Last year, in his National Day address, he had underlined that Seychelles was on course to being a high- income country and that this was linked to the dynamism and determination of the Seychellois people.

“Seychelles is a dynamic country. We are moving rapidly, and facing new challenges. We have the capacity, courage, energy and resilience to overcome these challenge … Seychelles is today considered an upper middle-income country. Can we transform Seychelles into a high-income country in the next few years? Yes, we have the potential to do so. We have the potential to diversify and grow our economy. And this has been confirmed by the World Bank. A new study recently published has placed Seychelles among six middle-income countries with a high probability of transiting to a high-income economy in the years ahead,” said the President on June 18, 2014.

A high-income economy is defined by the World Bank as a country with a gross national income per capita above US $12,735 in 2014, calculated using the Atlas method.
Seychelles is the second African country after oil-rich Equatorial Guinea to make the high-income list.

Other than Seychelles, Argentina, Hungary, and Venezuela also moved from the upper middle-income category to high-income, with average per capita income levels now of US $12,736 or more.
Gross National Income (GNI) is a broad-based measure of income generated by a nation’s residents from international and domestic activity. GNI per capita measures the average amount of resources available to persons residing in a given economy, and reflects the average economic well-being of a population.

Each year on July 1, the World Bank revises the income classification of the world's economies based on estimates of GNI per capita for the previous year. The World Bank also uses the updated GNI per capita estimates in its operational classification of economies that determines lending eligibility.

“While we need to measure development progress in different ways, income-based measures, such as GNI, remain the central yardstick for assessing economic performance,” said Kaushik Basu, World Bank chief economist and senior vice-president.

“Our latest data show that in terms of this indicator, the world’s economic geography has changed a lot. In 1994, 56.1% of the world’s population – 3.1 billion people – lived in the 64 low-income countries. In 2014, this was down to 8.5%, or 613 million people, living in 31 countries. It is heartening to see that over the last one year itself four nations crossed over that critical line from the low-income to the lower middle-income category,” added Mr Basu.