Seychelles’ credit rating remains at “BB‑” with a stable outlook from Fitch Ratings in 2023, reflecting a solid tourism recovery, stable growth prospects, low inflation and a stable economic framework. The rating agency noted that the tourism sector recorded a strong rebound in 2022, with tourist arrivals surging 82 percent year‑on‑year to reach 86.4 percent of 2019 levels.
Fitch warns that global economic uncertainty and competition from other high‑end tourism destinations could slow visitor growth to an estimated 5 percent in 2023‑2024. Despite continued visitor growth, the agency expects tourism receipts to decline by about 14 percent in 2023 and 7 percent in 2024, falling to 41.3 percent of GDP. This decline is attributed to a tapering of arrivals of high‑spending tourists from Russia and other countries, although there is upside potential from a larger‑than‑expected fall in oil prices—leading to lower airfares—and shallower recessions in major European economies.
Regarding growth prospects, Fitch points to real economic growth of 8.9 percent in 2022 and projects growth of 3.6 percent in 2023 and 4.2 percent in 2024 as tourism normalises. The medium‑term outlook envisions growth of about 4 percent, with upside mainly from investment, which has lagged in recent years due to execution challenges, rather than from productivity gains or labour‑force expansion.
On inflation, the rating notes that currency appreciation since mid‑2021 helped bring inflation down to an average of 2.6 percent in 2022, compared with 9.8 percent in 2021. While macroeconomic and monetary policy remain stable and largely predictable, Fitch observes that the transmission of monetary policy is somewhat constrained by the high level of dollarisation in the economy.
Fitch expects Seychelles’ current‑account deficit to continue shrinking, to 3.9 percent of GDP in 2023 and 3.5 percent in 2024, as tourism inflows normalise. However, the country’s heavy reliance on tourism for foreign‑exchange earnings and its dependence on imports for most basic goods remain key weaknesses. Vulnerabilities include significant exposure to rising sea levels, with major impacts likely only in the medium to long term. In the short term, tourism expansion is constrained by saturated coastal infrastructure and risks of environmental and biodiversity degradation. Climate‑change adaptation measures are not yet incorporated into fiscal planning, although Seychelles receives technical assistance from international bodies.
The highest Fitch rating ever assigned to Seychelles, an archipelago in the western Indian Ocean, was a grade of BB in 2019.
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