The Republic of Seychelles lies northeast of Madagascar, an archipelago of 115 islands with almost 98,000 citizens, three-quarters of whom live on the main island of Mahé. Seychelles has the highest gross domestic product (GDP) per capita in Africa, at $12.3 billion (2020).). Seychelles is highly dependent on tourism, and climate change poses long-term sustainability risks.
Independent since 1976, the Seychelles is a relatively young democracy: the first multiparty presidential election was held in 1993 after the adoption of a new constitution. The latest presidential and parliamentary elections took place in October 2020. The election brought an opposition candidate, Wavel Ramkalawan, to the Presidency for the first time since the introduction of democratic elections. Ramkalawan’s party, Linyon Demokratic Sesel, also won the majority of seats in the national parliament.
Economic developments and outlook
Following the economic crisis and resulting sovereign debt default in 2008, the Republic of Seychelles through a prudent reform program made significant progress in achieving economic stability and fiscal sustainability. As a result, the economy grew by an average rate of 4.2% per annum between 2009 and 2019.
The economic and social shock from COVID-19 (coronavirus) on the Seychellois economy is severe. Economic growth declined significantly in 2020 to -13.5% from 3.9% in 2019 due to the significant disruptions in economic activities in Seychelles, driven by lower tourism activities which declined by more than 60%. In addition, the fiscal deficit widened to 22.6% of gross domestic product (GDP) in 2020 on account of lower revenues and higher COVID-19-related spending and is projected to be 15.3% in 2021. Recovery is expected to gradually begin in 2021 driven by a resumption of tourism and related capital flows. If unmitigated, the poor are expected to bear a disproportionate impact of the economic shock. According to the 2013 household survey, about six out of 10 poor individual have a job, mostly in informal activities in the service sector that are expected to experience significant declines.
While the immediate priority is the containment of COVID-19 and recovery from its economic and social impact on the country, a focus on longer term structural issues is also warranted for a strong and resilient recovery.
Among Seychelles’ development challenges is the importance to focus on greater productivity, participation and performance of its economy as means to increasing shared prosperity. Some of the main institutional challenges in this regard are notably barriers to open and operate businesses, inefficiencies in public sector management, such as limited statistical capacity, scope for a more strategic and sustainable approach to social protection, as well as the need to broaden access to quality education and skills development. Climate change adaptation, including through strengthened disaster preparedness systems and enhanced coastal management, is also key.
Last Updated: Mar 18, 2021