Treasury is predicting international travel could resume by mid-next year, allowing for tourists, international students, and temporary and permanent migration to recommence for Tasmania.
The reopening of Australia's borders could give Tasmanian services exports a boost, increase employment growth by 2 per cent and return the population growth rate to the pre-pandemic level of 0.6 per cent per year.
In the meantime, an expected rise in household and government spending in the coming 12 months has led Treasury to predict the Tasmanian economy could grow by 4 per cent, while housing construction - driven by the HomeBuilder scheme - will also ramp up.
The budget papers detail how the reopening of international borders could help Tasmania's economic recovery.
"It was also assumed that the vaccine rollout in both Australia and internationally continues to progress and is effective, facilitating a return of temporary and permanent migration to Australia, commencing in mid-2022," the budget's economic outlook reads.
"Through the first half of 2022-23, the return of international visitors and overseas migrants to Tasmania is expected to drive strong employment growth in the state, with growth easing to around its long-term average in the second half of the year."
But delays in the vaccine rollout in either Australia or globally could push this back towards 2023.
Premier Peter Gutwein took a cautious approach when asked about the potential for international borders to reopen next year.
"That is obviously something that timing will be determined by the federal government, it's outside our hands," he said.
"At the moment, the budget is not set on a particular date in terms of when international borders will reopen.
"What we have seen over the last 18 months with international borders closed, is our economy get stronger and stronger."
This increased local spending was also noted in the budget papers, with the reopening of international borders also posing a potential risk to intrastate travel by Tasmanians.
"The future reopening of Australia's border also comes with the risk that local expenditure, including intrastate travel in Tasmania, may decline as Tasmanians recommence international travel," the budget papers read.
A tone of economic uncertainty was evident throughout the budget, with border restrictions and private investment the main variables.
READ MORE: Dog euthanised after attacking girl
The Tasmanian economy could grow by 4 per cent in 2021-22 "on the back of strong growth in household consumption and government expenditure", according to the budget. Growth could then return to 2 per cent in 2022-23.
Housing construction could be key over the coming 12 months if private investment declines, as predicted.
HomeBuilder funds poured into Tasmania at greater rates than estimated, with $25.2 million from the scheme arriving in 2020-21, and a further $47.3 million expected for 2021-22.
Labour force participation has largely returned to pre-pandemic levels. Inflation has also risen in Tasmania, particularly in Hobart.