When Taylor Swift picks a country to “Shake It Off”, it might help the nation’s economy to shake off the impacts of the global economic slowdown.
Since the World Bank announced the possibility of a global recession in its 2022 report, fears that the world will experience an extended period of economic contraction has plagued many countries.
In January, the World Bank predicted the global economy would slow down for the third consecutive year in 2024. According to some economists, this makes a recession likely in the near future.
The impact of a global recession may vary from one country to another. But with disrupted supply chains and cash flow, the common symptoms and effects are hikes in unemployment and poverty rates, rising prices, reduced profit, and default for businesses.
American singer-songwriter Taylor Swift may have an answer to address these challenges. Beyond micro and macroeconomics, business students should be studying Swiftonomics – especially the economic impact of Swift’s current global tour.
The record-breaking Eras tour
Eras is Swift’s sixth concert tour. It began in March 2023 and is scheduled to conclude in December 2024. Consisting of 152 shows performed across five continents, critics have given it highly positive reviews for its grand aesthetic design and immersive ambience.
The tour is already the highest-grossing music tour ever and the first to reach US$1 billion in total ticket gross sales globally. More impressively, that total did not yet include the sales of the Eras Tour film, which reportedly made US$250 million, plus another US$200 million in merchandise sold during the tour.
What does this tour have to do with the global recession?
Music and the multiplier effect
First-year economics students would tell you that the impacts of Swift’s tour were not limited to the fantastic figures outlined above. In fact, her tour could result in a multiplier effect that could benefit an economy.
Simply defined, the multiplier effects measure how a change in economic activity, like investment or spending, will have a spill-over amplified impact on the various sectors and the total output of a country.
This phenomenon is not new. The concerts by other big names in music, such as those of UK-based band Coldplay and South Korea’s boy-group BTS, have also resulted in such effect. However, the scale of Swift’s tour has been considerably stronger compared to others.
For example, let’s look at the multiplier effects of her March concerts in Singapore.
Swift’s GDP-boosting visit to Singapore
While raising controversy for signing a deal to be the only stop on Swift’s Southeast Asia Eras tour, Singapore enjoyed a significant boost from hosting six concerts in the country. This is even after accounting for the reportedly US$18 million payments for exclusively hosting the concerts in South-East Asia.
Here are some interesting statistics. Swift’s concerts, from March 1 to 9 2024, increased the overall tourism-related bookings for the country by an astonishing 275% compared to the same period two weeks later.
Meanwhile, Singapore’s inbound flights and accommodation bookings rose by 186% and 462% respectively during the week of the concert.
What did that mean for the country’s Gross Domestic Product (GDP) growth?
Economists told Bloomberg they estimated Singapore’s Swift concerts would add around SG$300–$400 million (US$222–$296 million) to the country’s first-quarter GDP.
The additional boost was on top of the reported year-on-year growth of Singapore of 2.7% in the first quarter of 2024.
That latest growth spurt topped the 2.2% expansion of GDP in the last quarter of 2023 – thanks to the multiplier effect in Singapore’s tourism sector ignited by the American pop star.
This staggering impact of the the six-day concert for Singapore follows the success of the tour in the US last year.
One research company estimated the US economy may have enjoyed a multiplier boost of US$5 billion from the 52 shows in the country last year, thanks to concertgoers spending an average of $1,300 each. Swift even earned a mention in a US Federal Reserve report, which noted:
Despite the slowing recovery in tourism in the region overall […] May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city.
What can other nations learn?
Singapore’s strategic move to secure exclusive concerts was a “creative” expansionary fiscal policy.
Traditional expansionary fiscal policies commonly involve a reduction in taxes and/or an increase in government spending. Keynesian economists, who believe in the need for government intervention to stimulate and amplify economic activity during a recession, see these fiscal weapons as necessary.
Critics, however, argue that the multiplier effects of these policies could suffer from time lags. Consequently, fiscal policy may only affect the economy several months or, sometimes, several years after it is initiated.
But Singapore’s experience from Swift’s tour told a different story.
Sure, on the one hand, the economy went through a short period of demand-pull inflation, with prices of some goods and services rising substantially. But while the six sold out concerts were on, various sectors of Singapore’s economy – including hotels, airlines and restaurants – benefited from a much-needed post-COVID-19 boost.
What Singapore did with Swift provides a universal lesson that all countries could learn.
When strategically planned, a targeted spending policy involving big names in the entertainment industry can create a substantial multiplier effect. Such an effect can help an economy in a downturn bounce back.