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Seychelles THE ECONOMY
A notable feature of the Seychelles economy was the
high per
capita GDP of US$5,900 in 1992, some fifteen times the
average of
sub-Saharan Africa. Total GDP was estimated at US$407
million in
1992. Economic growth, which had proceeded at a strong 5
to 6
percent annually since the mid-1980s, resumed in 1992 at
an
estimated rate of 4 percent.
The major source of economic activity is the tourist
industry
and tourist-related services in terms of employment,
foreign
earnings, construction, and banking. Although earnings
from the
tourism sector are impressive, providing about 50 percent
of GDP,
they are offset by the need to import large amounts of
food,
fuels, construction materials, and equipment, costing some
70
percent of tourism income. Gross tourism foreign exchange
earnings in 1993 were SRe607 million (for value of the
Seychelles rupee--see Glossary).
Moreover, the possibilities for
expanding
tourism are limited, and it is vulnerable to unpredictable
shifts
in demand, as occurred in 1991 when the Persian Gulf War
contributed to a sharp decline from 103,900 tourists in
1990 to
90,000 in 1991. By 1993 there was a strong recovery in the
tourist trade, bringing more than 116,000 visitors.
Hoping to avoid overdependence on tourism, the
government has
attempted to diversify economic activity by encouraging
new
industries and revitalizing traditional exports.
Production of
food and other items is being emphasized to reduce the
heavy
burden of imports needed to sustain tourism. Development
of the
nation's marine resources remains a principal governmental
goal,
pursued by expanding indigenous coastal fisheries and by
profiting from fees and services provided to foreign
fishing
fleets operating in Seychelles' EEZ. Small traditional
fishing
accounted for less than 3 percent of GDP in the early
1990s but
provided jobs for about 1,500 persons and growing foreign
exchange earnings.
The Seychelles' traditional marketings of copra and
cinnamon
bark had declined to an insignificant level by 1991. The
government's goal of achieving 60 percent self-sufficiency
in
food has not been realized although its efforts have
resulted in
increases in fruit, vegetable, meat (mainly chicken and
pork),
and tea production.
Parastatal (mixed government and private) companies
proliferated in many sectors of the economy under the René
regime. State-owned and parastatal companies accounted for
more
than half the country's GDP and about two-thirds of formal
employment. The parastatals enjoyed mixed success, and by
1992
the government had begun to divest itself of selected
enterprises.
Seychelles traditionally has run a large trade deficit
because of the need to import nearly all manufactured and
most
agricultural commodities. Much of the gap has been covered
by
revenues from the tourism sector and to a lesser extent by
remittances from Seychellois workers abroad and by
overseas loans
and grants.
Seychelles has been relatively successful in containing
inflation. The retail price index, which includes some
goods and
services whose prices are set by the government, rose by
3.3
percent in 1992 and 4.0 percent in 1993. The generally
stable
price environment has resulted in part from wage
discipline, the
weakness in world oil prices, and a policy of importing
from
countries with low prices, including South Africa, whose
currency
has depreciated steadily against the Seychelles rupee.
To support its anti-inflationary strategy, the
government has
pursued a liberal exchange rate policy. Since 1979 the
rupee has
been pegged to the International Monetary Fund's
(IMF--see Glossary)
special drawing rights
(SDR--see Glossary). The
rupee's
relative stability has contributed to the stability of
domestic
prices.
Data as of August 1994
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