(Ecofin Agency) - In the Seychelles, tourism currently faces two major challenges. First is the impact of climate change, and second is the economic slowdown in regions where the Island mostly gets tourists from, Europe especially.
The Seychelles should record a 3% growth in tourism revenues in 2024-2025. This is far from the 24% increase recorded between 2016 and 2019. Fitch disclosed the figures in a report released on September 15.
According to the rating agency, contrary to last year, the country should receive fewer visitors this year. Last year, the number of tourists that came to the Seychelles was up by almost 82% compared to 2021, according to the country’s Central Bank. Tourism generated $932 million in 2022.
However, "the Seychelles authorities expect arrivals to return to 2019 levels by 2026," reveals the report.
The Island’s tourism industry, it should be noted, presently faces climate change effects, including rising sea levels and the increasing intensity and frequency of storms. Fitch estimates the annual financing requirement for climate change mitigation at around 5% of GDP, but only 0.9% of GDP/year is devoted to it.
Lauding the resilience of the Seychelles economy, the US financial rating agency has maintained its "BB-" rating for the country, with a stable outlook. The agency maintained its rating because of relatively high income levels, the support of multilateral creditors, and stable policies, among other factors. But "these strengths are offset by the economy's exceptionally high concentration in the tourism sector, which increases vulnerability to external shocks and medium- and long-term risks associated with climate change, " it added.
Regarding growth forecasts, Fitch expects the Seychelles’ economy to reach 4.5% in 2023 and 4.2% in 2024, before settling at around 3.9% in 2025. Fitch is more optimistic than the International Monetary Fund, which forecast an average growth of 3.9% over the 2023-24 period.
Charlène N’dimon (intern)