- GDP (PPP):
- $2.7 billion
- 4.2% growth
- 4.9% 5-year compound annual growth
- $28,779 per capita
- Inflation (CPI):
- FDI Inflow:
Seychelles’ economic freedom score is 61.4, making its economy the 87th freest in the 2019 Index. Its overall score has decreased by 0.2 point, with declines in scores for trade freedom, government spending, and property rights exceeding improvements in labor freedom and the tax burden. Seychelles is ranked 6th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional and world averages.
Economic growth in this Indian Ocean tourist destination has moved Seychelles to upper-middle-income status. To reduce dependence on tourism, improve the business environment, and encourage investment in other sectors, the government is focusing on debt reduction, restructuring loss-making state-owned enterprises, and “cross-subsidizing” electricity prices (charging higher prices to some consumers to subsidize lower prices for others). An inefficient legal framework and pervasive corruption severely hamper economic freedom. Additional reforms and market-opening measures are critical to improving competitiveness.
After independence from the United Kingdom in 1976, France-Albert René of the People’s Party seized power in a bloodless coup in 1977. In 1993, he was elected to serve as Seychelles’ first president. In 2004, he ceded power to Vice President James Michel, who was elected to his third five-year presidential term in 2015. In 2016, President Michel resigned and transferred power to Vice President Danny Faure. Seychelles enjoys a stable economic environment with lucrative fishing and tourism industries. In recent years, the government has encouraged foreign investment to upgrade hotels and other services while at the same time moving to reduce dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing.
The courts enforce interests in real property, including mortgages and liens. The World Bank’s 2018 Doing Business survey ranked Seychelles 62nd for registering property. The judicial branch is independent but slow, and court cases sometimes last years. Government corruption stems from a lack of transparency in the privatization and allocation of government-owned land and businesses. Many Seychellois believe the well-connected receive preferential treatment.
The personal income tax rate is a flat 15 percent. The top corporate tax rate is 33 percent. Other taxes include interest, vehicle, and value-added taxes. The overall tax burden equals 32.6 percent of total domestic income. Over the past three years, government spending has amounted to 36.4 percent of the country’s output (GDP), and budget surpluses have averaged 1.0 percent of GDP. Public debt is equivalent to 63.3 percent of GDP.
The regulatory framework still includes considerable bureaucratic and procedural hurdles for potential entrepreneurs. The formal labor market is not fully developed, and the inefficient public sector accounts for approximately 40 percent of total employment. The state-owned airline has added new destinations despite large operating losses, and Seychelles Public Transport Corporation has recorded losses despite a government subsidy.
The combined value of exports and imports is equal to 192.0 percent of GDP. The average applied tariff rate is 4.3 percent. As of June 30, 2018, according to the WTO, Seychelles had 10 nontariff measures in force. Foreign investment in some sectors remains restricted. The banking sector consists of both state-owned and foreign financial institutions. Financing options for the private sector are limited.