- GDP (PPP):
- $3.1 billion
- 3.9% growth
- 4.3% 5-year compound annual growth
- $30,260 per capita
- Inflation (CPI):
- FDI Inflow:
Seychelles’ economic freedom score is 66.3, making its economy the 60th freest in the 2021 Index. Its overall score has increased by 2.0 points, primarily because of an improvement in government integrity. Seychelles is ranked 4th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional and world averages.
The economy of Seychelles continued its rise in the moderately free ranks this year. To accelerate the momentum toward greater economic freedom and advance its goal of diversification, the government will need to intensify efforts to liberalize labor and financial markets, address ongoing shortcomings in the judicial system, and prioritize the anticorruption work it began in 2016.
IMPACT OF COVID-19: As of December 1, 2020, no deaths had been attributed to the pandemic in Seychelles, but the economy was forecast to contract by 13.8 percent for the year.
The Republic of Seychelles gained independence from the United Kingdom in 1976, and 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, Michel resigned and transferred power to Vice President Danny Faure. Faure was defeated in October 2020 elections by Wavel Ramkalawan of the LDS alliance, which also increased its majority in parliament. 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 also 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 legal system blends English common law, the Napoleonic Code, and customary law. The independence of the judiciary has strengthened, but court cases can last years. Government corruption stems from a lack of transparency in the privatization and allocation of government-owned land and businesses. An anticorruption commission established in 2016 is active.
The individual income tax rate is a flat 15 percent, and the top corporate tax rate is 33 percent. Other taxes include interest, vehicle, and value-added taxes. The overall tax burden equals 31.5 percent of total domestic income. Government spending has amounted to 36.1 percent of total output (GDP) over the past three years, and budget surpluses have averaged 0.5 percent of GDP. Public debt is equivalent to 58.3 percent of GDP.
Starting a business and obtaining electricity have become less costly. Seychelles has improved construction permitting by making internal processes more efficient. The unemployment rate was more than halved in 2019. According to the World Bank, subsidies accounted for more than 20 percent of the government’s budget for 2020.
Seychelles has two preferential trade agreements in force. The trade-weighted average tariff rate is 5.5 percent, and 11 nontariff measures are in effect. Foreign investment in some sectors remains restricted. The government acknowledges the benefits of foreign investment but has done little to enhance the investment environment. The banking sector includes both state-owned and foreign financial institutions. Financing options for the private sector are limited.