Economic activity and trends in Seychelles |26 January 2023
Seychelles faced severe economic and social shocks from the coronavirus pandemic. The outlook in the medium-term remains positive. The solid recovery of the economy of Seychelles has continued in 2022. The Central Bank of Seychelles has sustained a suitably accommodative monetary policy. Significant relief and recovery processes have helped fuel an economic recovery while citizen-friendly policy measures have stabilised markets.
In the long-term, the island’s annual GDP growth rate is estimated to trend around 5.90 per cent in 2023. The Ministry of Finance, National Planning and Trade projects a primary surplus of 1.1 per cent in 2023 (Seychelles NATION, 2022). Earnings from tourism indicate a significant increase in visitors to the country. While the top market continues to be Europe, advancement in other markets in Asia, Africa and others are apparent this year.
Tourism in Seychelles in a Post-Covid-19 scenario
For Seychelles, one of the worst-hit sectors during Covid-19 was tourism. The country’s economic recovery from the pandemic has been strong. It is expected that the island nation’s hospitality industry will show sustained recovery this year to the pre-Covid levels. Seychelles welcomed 296,422 visitors from January to November 20, with estimated tourism earnings of US $823 million as at October 2022 (The Tourism department, Seychelles 2022). The figures published by the Central Bank of Seychelles indicate that the country anticipates 330,000 visitors in 2022 (tourism.gov.sc,2022). In contrast to the cruise ship industry, Seychelles saw an upsurge in the arrival of yachts.
In the process of nation-building and infrastructure development, the 29,000 square kilometre Victoria Waterfront project in Seychelles is unquestionably one of the much anticipated national scale development projects. This project aims to make the capital of Seychelles livelier and is expected to be completed in five years (Seychelles News Agency). The International Monetary Fund (IMF) projects real GDP growth of 6.1 per cent in 2022. The debt to GDP ratio was contained at 87.4 per cent and is estimated to be even lower in 2023. While actively promoting the ocean economy, the government perceives the port to be a potential container transshipment hub in the region.
The importance of SME policy for Seychelles
Seychelles has the highest GDP (Gross domestic product) per capita in Africa at US $13,306 (2021). With an economy vastly reliant on tourism, growth is expected to peak at 10.9 per cent in 2022 (World Bank, 2021). SMEs are the leading employment creators in this small island contributing towards nearly forty per cent of the country’s total employment rate. The Ministry of Investment, Entrepreneurship and Industry has been placing much emphasis on supporting MSMEs. According to the Development Bank of Seychelles, its citizens will receive an SME (Small and Medium Enterprises) incentive scheme to finance the development of SME businesses. Also working towards promoting and providing innovative services to benefit existing and to-be entrepreneurs are the Seychelles Investment Board (SIB) and the Seychelles Bureau of Standards (SBS).
Diversify its economy
Seychelles has played a key role in promoting the Blue Economy concept. Seychelles should continue to diversify its economy to decrease overdependence on tourism and lessen its vulnerability and uncertainty of growth.
By Dr Srimal Fernando
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About the Author:
Dr Srimal Fernando received his PhD in International Affairs. He was the recipient of the prestigious O.P. Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. As a Lecturer, he focuses on the comparative politics of Small Island Developing States (Sids). Dr Fernando is a specialist in International Relations and an adviser on New Regional Diplomacy. He has received accolades such as the 2018/2019 ‘Best Journalist of the Year’ in South Africa (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of the South Asian Union’.