Tourism and Economic Multipliers: GDP and Employment

In 2024, global tourism continues to be one of the key drivers of economic recovery and job creation, particularly in low- and middle-income countries. To better measure its impact, two key indicators developed by the World Economic Forum help us understand the phenomenon: the Travel & Tourism GDP multiplier and the Travel & Tourism employment multiplier.

The T&T GDP multiplier represents the ratio between tourism’s indirect and induced contribution to GDP and its direct contribution. In other words, it measures how much additional economic value the sector generates beyond its immediate impact.

The T&T Employment multiplier reflects the ratio between total employment (direct, indirect, and induced) and direct employment generated by tourism. A high value suggests that the tourism sector stimulates significant job creation throughout the value chain.

A Comparison Across Countries

In Europe, Iceland stands out as a leading case, with high values on both multipliers—around 5 on a scale from 1 to 7. Croatia and Portugal also show strong performance, with notable GDP multipliers and solid employment impacts (an average of 3.44 for Croatia and 4.76 for Portugal). Greece is also on the rise, with values approaching 4, demonstrating how tourism can serve as a catalyst for both economic growth and sectoral development.

On the other hand, countries like India, the Philippines, and Indonesia emerge in terms of the employment multiplier, where tourism generates at least two indirect jobs for every direct one.

China and Australia, despite the substantial absolute contribution of tourism to their GDP, show relatively low employment multipliers: while both countries score the maximum 7 on the GDP multiplier, they rank only 63rd and 70th respectively in employment impact. This suggests that value creation is concentrated within the directly involved tourism sector, bringing benefits that do not spread as effectively to other industries.

At the top of the global ranking is Laos, an emerging country in Southeast Asia, which scores the highest in both indicators. This clearly shows the central role that tourism plays in its national economy.

At Twissen, we have observed that countries with a high GDP multiplier but a low employment multiplier may have highly productive yet less inclusive tourism sectors. Conversely, countries with strong employment impact but lower economic return may use tourism as a tool for social inclusion but require investment to enhance service quality and value.

The challenge ahead will be to balance both dimensions: generating more value and more jobs through policies that promote innovation, sustainability, and skills development in the tourism sector.

Twissen