Authors : Tilahun Temesgen, Roland Alcindor
The economy of Seychelles continued to grow in 2016, driven primarily by tourism, but the rate of real gross domestic product (GDP) growth slowed to an estimated 4.8% from 5.7% in 2015. The medium-term growth outlook is moderate, with real GDP projected to grow by 3.5% in 2017 and 3.3% in 2018. The country reached high-income status in 2015. The traditional tourism and fisheries sectors are expected to remain the main drivers of growth, along with information and communications technology (ICT). Prudent fiscal and monetary policies, coupled with continued political stability, have helped consolidate macroeconomic stability, and inflation is expected to remain in single digits in 2017.
Challenges facing the country include insufficient economic diversification and vulnerability to external shocks. Growth needs to be made greener and more inclusive to protect Seychelles’ fragile natural environment against the adverse impacts of climate change and to ensure that growth benefits all members of the society. The development of the private sector is paramount to achieving a more diversified economy, but it requires a more enabling environment to exploit its potential and expand into new business areas.
Greater attention to entrepreneurship, skills development and improved financial inclusion will help Seychelles achieve a more inclusive and sustainable growth performance with better diversification. Despite its small population and short post-independence history, the country’s unique natural resources and the cultural diversity of its immigrant population have provided it with an innovative and entrepreneurial attitude. However, the overall entrepreneurship potential seems to be yet untapped due to a number of challenges, including lack of entrepreneurial drive among youth, lack of training in entrepreneurship and business creation, and a mismatch between the skills level of job seekers and the needs of the private sector. The new government in place since autumn 2016 has created new bodies for entrepreneurship development and industry that aim to support young entrepreneurs in starting businesses.
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