New Zealand will be the fastest growing economy in the Australasian region over 2021 and 2022 with its success attributed to the effective containment of the Covid-19, coupled with broader border relaxations expected in 2022, research house Fitch Solutions said.
Growth in the region continued to face "various downside risks" including low vaccination rates in the short term, while climate change-related issues and growing geopolitical tensions with China will muddy the region's growth outlook in the longer term, it said.
Fitch Solutions - part of Fitch group but separate from its credit rating arm - forecast Australasia's total GDP to average 2.5 per cent over 2021 and 2022 after a contraction of 4.0 per cent in 2020.
Growth would be uneven across the region, it said.
"Countries that have found relative success in mitigating the economic impact of the Covid-19 outbreak, such as New Zealand will recover at a faster pace," it said.
"We believe that New Zealand will be the growth outperformer in the region," it said.
"We forecast New Zealand's economy to grow by 5.5 per cent in 2021 and 4.4 per cent in 2022, following a contraction of 1.2 per cent in 2020.
"The country found early success in mitigating the viral outbreak in 2020 and has since been able to keep its economy mostly open with limited and short-lived localised lockdowns in some parts," it said.
"New Zealand's growth in 2022 will most likely be propelled, especially if the country re-opens its borders to international tourists as planned, though this will be contingent on its vaccination programme."
About 15.7 per cent of the New Zealand population has been vaccinated, slightly lower than Australia's 18.2 per cent.
Australia - the largest economy in the region - will come in fourth in terms of growth.
Fitch Solutions said Australia had been more affected by the Covid-19 outbreak and especially the highly transmissible Delta variant.
However, in the first half of 2021, output in Australia had reached pre-pandemic levels, implying robust recovery.
Australia's vaccination rollout had faced disruption because of supply shortages; therefore, the country has had to install tougher lockdown measures than New Zealand in recent months, to mitigate the outbreak.
Australia's external sector has also faced risks from a trade dispute with China – its largest trading partner.
This has, however, been offset by higher commodity prices, which have kept the overall value of Australian exports high.
The slow pace of vaccine rollouts, coupled with the spread of more infectious Covid-19 variants, will pose significant downside risks to the region's growth.
Almost all the countries in the region have struggled to secure appropriate vaccine supplies.
"Moreover, some of the larger markets such as New Zealand and Australia have adopted a wait-and-see approach to securing the vaccines and rolling it out, which has also delayed their reopening," Fitch Solutions said.