As recession risks loom over Australia’s economy, an unexpected factor may deliver a much-needed boost at a time of maximum pressure from the Reserve Bank’s aggressive interest rate increases: Taylor Swift. The renowned pop icon has recently added Australia to her highly anticipated “Eras” tour, which is touted as the biggest ever, spanning a total of 106 shows worldwide and projected to generate over $1 billion in revenue.
Scheduled to run from February 16 to 25, Swift’s Australia leg will include three performances in Sydney and two in Melbourne. With such a limited schedule, it is expected that fans, commonly known as “Swifties,” will travel from other states and even from neighboring New Zealand to witness the superstar’s shows.
The timing of Taylor Swift’s tour could prove fortuitous as Australia’s economy faces the possibility of slowing down significantly in the coming months. The household savings ratio has already dipped to 3.7% in the first quarter, highlighting an income squeeze, compared to its peak at 23.6% in mid-2020.
Experts believe that the allure of mega acts like Taylor Swift might be enough to entice consumers to overcome subdued confidence and spend their money. This surge in services spending during the first quarter of 2024 could potentially boost the country’s GDP, countering the dampening effect of the Reserve Bank’s rate hikes implemented in 2022 and 2023.
Economists acknowledge that quantifying the exact impact on consumption is challenging since spending on airfare and hotels for the concert will likely be spread out between now and the end of the year. However, they anticipate a substitution effect, with fans reallocating their spending towards concert tickets and associated services rather than making additional expenditures.
The consensus among economists at AMP Capital Markets suggests that there is a 50% chance of a recession in Australia’s $2.3 trillion economy. Diana Mousina, deputy chief economist at AMP, humorously remarked, “If Taylor Swift can prevent an Australian recession, then she is an even bigger queen than I thought.”
Comparisons were made to Beyoncé’s tour in Sweden, which led to a temporary inflation blip as the superstar attracted over 80,000 concert-goers over two nights in Stockholm. However, Mousina believes that such an impact is unlikely to be replicated in Australia, as the economic landscape is expected to undergo significant changes by the time of Swift’s concerts in February.
Australia is set to report May inflation figures soon, with economists predicting a decline to 6.1% from the previous month’s 6.8%.
For her concert in Sydney and Melbourne, Taylor Swift offers various ticket packages, with the most expensive option priced at A$1,249. This package includes an “unforgettable A-Reserve floor ticket” and exclusive VIP merchandise. A simple seat in A-Reserve is listed at A$379.90, decreasing to A$79.90 for G Reserve.
An analysis of Sydney hotels on travel aggregator booking.com for the weekend of February 23 indicates a potential increase in accommodation prices due to high demand. The number of available hotels under A$200 per night dropped significantly compared to the prior weekend, suggesting a rise in accommodation price inflation in anticipation of Swift’s concerts.
While some express concerns that the spending associated with the concert may not provide the desired boost to the economy due to rising interest rates and the anticipated economic climate at the time, Prime Minister Anthony Albanese, an avid fan of Taylor Swift, hopes to secure a ticket to see the star. He recently shared his excitement, saying, “The Tay-Tay fever is here. It will be here for many months leading up to the gig, so I’m just hoping I can get a ticket.”
With Taylor Swift’s highly anticipated tour on the horizon, Australia’s economy may receive a much-needed boost, potentially countering the recession risks and generating a significant economic impact through increased consumer spending and demand for associated services.