Westpac Bank is forecasting a significant slowing of New Zealand's economy this year, with the impact of COVID-19 still keenly felt.

The bank's latest forecasts suggest the lack of overseas visitors over the summer will cost the country up to six per cent in gross domestic product (GDP), and result in the economy contracting by 0.7 per cent in the six months to March.

"GDP remains below the path it was on before COVID hit, reflecting the loss of international travel and tourism resulting from the closure of the border since March,” says Westpac Bank chief economist Dominick Stephens.

"With the domestic economy having already recovered its lost ground, and tourism remaining out of action, further growth will be harder to come by in the coming year."

Dominick says by the end of 2021, he expects GDP to be up just two per cent on a year earlier.

Tauranga Chamber of Commerce CEO Matt Cowley admits there are some concerns in the region regarding what quarters three and four of 2021 could look like.

'Government's fiscal spending and money printing last year has achieved its goal of rebounding the economy after the initial COVID-19 lockdowns,” says Matt.

'But that money has washed through the economy and there are some concerns from business what quarters three and four of 2021 could look like, especially with closed borders, restricted labour and pressured supply chains.

'Winter is generally tough for our hospitality, tourism and retail sectors. However, this winter could be particularly tough with the risk of yo-yo'ing lockdowns and strained cash reserves after last winter and a summer of no international tourists.

'There is a perception that the economy is back to normal. I have heard a few cases of landlords putting up rents to make up for lockdown last year.

'We still are not out of turbulent economic times yet and I plead for landlords to have a longer term focus with their tenants.”

Matt is also keen to point out areas in which Tauranga could still thrive economically.

'As long as we can pick the fruit and export them to overseas markets, our dominant primary industries will help bring money into the region.

'Despite NZ's net migration being at an all-time low since COVID-19, Tauranga's long-term population growth will likely continue as we're an attractive place for kiwis to live.

'There are positive signs for the local construction sector as long as Tauranga City Council is able to free up land for development and allow changes to encourage appropriate intensification.”