Authors : Kim Harnack, Jacob Oduor, Tilahun Temesgen
In July 2015 Seychelles reached high-income status, after average gross national income (GNI) per capita reached USD 13 710 in 2013-14. The government has implemented sound macroeconomic policies and comprehensive structural reforms in recent years, which have supported robust economic growth, averaging 5.3% during 2011-15, driven primarily by tourism and information and communication technology (ICT). Growth rates nonetheless registered an overall downward trend from about 7.9% in 2011 to an estimated 4.6% in 2015, mainly because of decelerating growth in construction, as several large projects ended in those years. Seychelles’ medium-term growth outlook is moderate, with gross domestic product (GDP) projected to grow at 3.1% in 2016 and 3.7% in 2017. The traditional tourism and fisheries sectors are expected to remain the main drivers of growth. Prudent fiscal and monetary policies have helped consolidate macroeconomic stability, and inflation is expected to remain below 3% in 2016 and 2017.
Seychelles continues to face a number of challenges. The country suffers from insufficient economic diversification and vulnerability to external shocks, given the dependence of its economy on tourism and fisheries. The development of the private sector is therefore paramount in achieving a more diversified economy, reducing vulnerability and shielding the country from shocks. However, the private sector requires a more enabling environment to exploit its potential fully and expand into new business areas. Furthermore, growth needs to be made greener to protect Seychelles’ fragile natural environment better against the adverse impacts of climate change.
To promote the socio-economic development of the country, the government adopted the National Development Strategy (NDS) 2015-19 in November 2015, with the concept of the “Blue Economy” as its centrepiece. The concept emphasises the economic potential of Seychelles’ vast Exclusive Economic Zone (EEZ), a marine area of 1 374 000 km2 (the second largest in Africa), for inclusive growth. This innovative concept integrates conservation and sustainable use of ocean resources, oil and mineral wealth extraction, bio-prospecting, sustainable energy production and marine transport, as well as branding Seychelles a “blue” tourism destination. The NDS 2015-19 focuses on four “key results areas”: governance, economic development, social development, and environment and energy.
Seychelles is a small island developing state (SIDS), with high income inequality: the 2006/07 household survey measured the Gini coefficient of income inequality at 65.8. Poverty levels are, however, very low with only 0.25% of the population living on USD 1.25 or less per day in 2007. Around 90% of the 94 000 inhabitants live on Mahé, one of three main islands. However, with its limited land space and high population density, the country needs to observe a delicate balance in addressing land use, conservation and economic development. The country has begun to design policies and plans to address these issues holistically.
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