When Patrick Herminie took office on 26 October 2025, after winning a runoff with 52.7% of votes, he inherited a paradoxical Seychellois economy: a record tourism year in 2025 — 398,841 arrivals, up 13% — but growth slowing markedly in 2026 under the effects of an exogenous shock and rising public debt.
A Tourism Boom Overtaken by a Geopolitical Shock
The Seychelles economy had posted robust growth in 2025: 5.8% according to the World Bank, 5.1% per the IMF. But projections for 2026 are markedly more subdued. The IMF now estimates growth at approximately 1.5%, while rating agency Fitch projects a 10% drop in tourist arrivals and an 8% fall in sector revenues. Over the first seven months of 2026, arrivals are already down 11% year-on-year, partly due to disruptions to international air routes linked to conflict in the eastern Mediterranean.
This structural vulnerability of the archipelago to its tourism dependence lies at the heart of the new president's economic challenge. The Seychelles draws over 60% of its foreign exchange earnings from tourism, exposing the economy to any sectoral or geopolitical shock.
Rising Debt, Eroding Reserves
The Seychelles' public and publicly guaranteed debt stood at 53.6% of GDP at end-2025. The IMF projects it will reach 57.2% of GDP by end-2026, widening the gap with prudential norms recommended for small island states. International reserves, estimated at approximately $878 million at end-December 2025, provide around four months of import cover — a cushion deemed adequate but one that will shrink if the tourism contraction is prolonged.
The combination of rising debt, slowing tourism revenues and heavy import dependence (the archipelago is self-sufficient in almost no sector) constrains the budgetary room for manoeuvre of the Herminie government.
Why This Matters
The Seychelles remain a barometer of the health of the blue economy and luxury tourism in the Indian Ocean. Their challenges — tourism dependence, debt exposure, climate risks to coastal assets — resonate with those of Mauritius, Réunion and the region's small island states. How President Herminie manages this slowdown will provide valuable insights into the resilience of island economies in the face of external shocks.
Source: riotimesonline.com; IMF World Economic Outlook 2026; Fitch Ratings 2026