Seychelles has no indigenous population and was first permanently settled by a small group of French planters, African slaves, and South Indians in 1770. Seychelles’ modern population is composed of the descendants of French and later British settlers, Africans, and Indian, Chinese, and Middle Eastern traders and is concentrated on three of its 155 islands – the vast majority on Mahe and lesser numbers on Praslin and La Digue. Seychelles’ population grew rapidly during the second half of the 20th century, largely due to natural increase, but the pace has slowed because of fertility decline. The total fertility rate dropped sharply from 4.0 children per woman in 1980 to 1.9 in 2015, mainly as a result of a family planning program, free education and health care, and increased female labor force participation. Life expectancy has increased steadily, but women on average live 9 years longer than men, a difference that is higher than that typical of developed countries.

The combination of reduced fertility and increased longevity has resulted in an aging population, which will put pressure on the government’s provision of pensions and health care. Seychelles’ sustained investment in social welfare services, such as free primary health care and education up to the post-secondary level, have enabled the country to achieve a high human development index score – among the highest in Africa. Despite some of its health and education indicators being nearly on par with Western countries, Seychelles has a high level of income inequality.

An increasing number of migrant workers – mainly young men – have been coming to Seychelles in recent years to work in the construction and tourism industries. As of 2011, foreign workers made up nearly a quarter of the workforce. Indians are the largest non-Seychellois population – representing half of the country’s foreigners – followed by Malagasy.

Since independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the pre-independence, near-subsistence level, moving the island into the high income group of countries. Growth has been led by the tourist sector, which directly employs about 26% of the labor force and directly and indirectly accounts for more than 55% of GDP, and by tuna fishing. In recent years, the government has encouraged foreign investment to upgrade hotels and tourism industry services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of the offshore financial, information, and communication sectors, and renewable energy.

In 2008, having depleted its foreign exchange reserves, Seychelles defaulted on interest payments due on a $230 million Eurobond, requested assistance from the IMF, and immediately enacted a number of significant structural reforms, including liberalization of the exchange rate, reform of the public sector to include layoffs, and the sale of some state assets. In December 2013, the IMF declared that Seychelles had successfully transitioned to a market-based economy with full employment and a fiscal surplus. However, state-owned enterprises still play a prominent role in the economy. Effective 1 January 2017, Seychelles was no longer eligible for trade benefits under the US African Growth and Opportunities Act after having gained developed country status. Seychelles grew at 5% in 2017 because of a strong tourism sector and low commodity prices. The Seychellois Government met the IMF’s performance criteria for 2017 but recognizes a need to make additional progress to reduce high income inequality, represented by a Gini coefficient of 46.8.

As a very small open economy dependent on tourism, Seychelles remains vulnerable to developments such as economic downturns in countries that supply tourists, natural disasters, and changes in local climatic conditions and ocean temperature. One of the main challenges facing the government is implementing strategies that will increase Seychelles' long-term resilience to climate change without weakening economic growth.