Tasmania's borders have been its best asset during the coronavirus pandemic, but vaccinations in and outside the state are the best indicator to watch now, new economic analysis says.
" ... how the state transitions to more open borders will be very important," Deloitte Access Economics said in its latest Business Outlook report.
"The good news is that Tassie looks well placed to be able to choose the timing of that transition.
"COVID-free and open for business, that's something only a handful of states can say."
Deloitte forecast Tasmania and South Australia would lead economic growth at 3.6 per cent in the current financial year, thanks to minimal effects from the pandemic.
National growth was forecast to be 1.5 per cent.
Deloitte said the state's retail sector was going from strength to strength, while Tasmanians could not seem to get enough of home improvements and cars.
"But some of the spending train is reaching the station, so don't expect families to drastically increase their spending as they pop off to the shops during 2022," it said.
Business investment was holding up pretty well and commercial construction had taken the baton from machinery and equipment investment.
It said confidence was the key to keeping business engaged and the state's economy was recovering faster than expected from last year's virus-driven crash.
Downsides included jobs momentum slowing, while iron ore prices had dropped.
" ... the closure of borders continues to put Tassie's labour market to the test," the report said.
"Although job advertisements are elevated, getting the right workers continues to be an issue.
"Up until last year, Tassie businesses relied on international migration to help fill skill gaps in the local labour pool.
"That tap has well and truly been turned off at the mains."
It said migrants also provided an important offset to the state's ageing population.
"But with international migration shut off for some time to come, the state's best chance at keeping population growth alive in the short run is to attract interstate workers seeking a tree change," it said.
"But longer term, the best remedy for the ageing population is the creation of meaningful jobs that keep young people in the state in the first place."
Deloitte said much continued to go right for Tasmania, due to strong coronavirus control and effective government support.
"But from here on out, Tassie is dependent on many external factors well out of the state's control," it said.
"Most important on that from is how quickly the rest of the country can get vaccinated ..."