Does tourism contribute significantly to the Greek economy? A multiplier analysis

Tourism is one of the growing service sectors in Greece. In 2014, the direct and indirect contribution of the Greek tourism industry to total GDP and employment reached 17.3% and 19.2%, respectively (WTTC, 2015). As the economic importance of the tourism industry is growing among the policymakers and researchers, the objective of this paper is to analyse the contribution of tourism to Greek’s economic growth. We use a trivariate model of real gross domestic product (GDP), international tourist expenditure and a real effective exchange rate, to calculate a tourism multiplier in order to assess the contribution of tourism to the economic growth. Using quarterly data for Greece during the period 2000q1 to 2013q2, we estimated results as a tourism multiplier of 1.21. We also estimated that the tourism industry generated an increase of 1.0% in the Greek GDP for the year 2013.