Economic growth supported by investments
Fitch Ratings has affirmed Seychelles’ credit rating at BB-, citing favorable prospects backed by strong global banking governance indicators and multilateral lenders.
These strengths are counterbalanced, according to the published ratings, by the small size of the economy and its heavy reliance on the tourism sector. The report notes that Seychelles’ tourism industry, which directly contributes 25 % to the country’s GDP and 40 % of its current revenue, has stagnated this year. The sector has experienced a slow increase in visitor arrivals during the first eight months of the year. Authorities predict that arrivals will reach 95 % of 2019 levels by 2025, which is lower than previous forecasts.
Regarding economic growth, Fitch forecasts GDP growth of 3 % and 4 % for 2024 and 2025, respectively. This is partly due to the positive impact of the 2025 Beach Soccer World Cup and pre-election spending ahead of the presidential and legislative powers. Potential growth is expected to be around 3.5 %, supported by over 700 million USD in hotel projects slated to open in 2024-2025. This will increase the country’s accommodation capacity by 6.4 %. Additionally, the information and communication technology (ICT) sector has proliferated in recent years. However, significant economic diversification remains limited.
Fitch noted that Seychelles continues to perform well compared to the benchmarks of the IMF’s Extended Credit Facility (ECF) and Resilience and Sustainability Framework (RSF). According to the most recent ECF assessment, Seychelles has met all quantitative performance targets. The country is also beginning to incorporate climate-related reform requirements into its budgetary processes. Fitch views positively the technical support Seychelles receives from the IMF, World Bank, and other multilateral lenders. This enhances fiscal management and integrates climate risk mitigation into budget execution. The IMF estimates that Seychelles needs 670 million USD, or 31.2 % of its 2023 GDP, for climate change mitigation by 2030.
