Tasmania's economy is on track to recover quicker than expected from coronavirus, according to the latest budget forecasts.
The island state's net operating deficit this financial year has improved from $1.1 billion, forecast in November's budget, to $970.7 million.
"The release of the Revised Estimates Report 2020-21 confirms our economic recovery is well underway," Premier Peter Gutwein said in a statement on Monday.
About 80 per cent of Tasmanians have returned to work since the height of the pandemic in May, while the participation rate has returned to pre-pandemic levels.
The state's employment rate is expected to stay at seven per cent this year, down from the 8.5 per cent predicted in the budget
Tasmania's net debt was revised down by $151.9 million from the budget figure of $1.8 billion.
Growth of 0.75 per cent is now expected in 2020/21, an improvement from the 1.5 per cent forecast contraction.
The increased economic activity was underpinned by growing consumer and business confidence, retail trade and strong dwelling approvals, Mr Gutwein said.
The report noted the threat of further COVID-19 outbreaks continues to impact on business and consumer confidence.