The prime minister, who arrived in Queenstown on Saturday for an annual Australia-New Zealand leaders meeting, wore a wide grin as he hugged Christopher Luxon.
It is his second time across the Tasman as Australia's leader.
Ahead of official talks including a trade forum and meetings with New Zealand's leadership, Mr Albanese was welcomed in a powhiri, a formal Maori welcoming ceremony.
Ngai Tahu tribe elders Sir Tipene O'Regan and Edward Ellison, both dressed in feathered cloaks, shook hands with Mr Albanese before the group sat down with business leaders and took part in a business roundtable.
Mr Albanese and Mr Luxon represent opposite ends of the political spectrum, but both have affirmed their nations share a "deep and enduring bond" as friends, neighbours and allies.
"I thank you so much for the warm and generous welcome," Mr Albanese told attendees.
He spoke of the "uncertain world" the two nations faced with "geopolitical tension, issues with trade and conflict in the world".
"But there is one thing that is certain and that is that Australia and New Zealand stand together," Mr Albanese said.
The single economic market was established in 2009 to grow trade and deepen investment links between the two countries, making it easier for trans-Tasman business.
Two-way trade between the two countries is worth $32 billion.
Co-operation between the two governments is broad, with more than half of the NZ cabinet visiting Australia since Mr Luxon's government took office in late 2023.
The "complicated" relationship between opportunities and challenges posed by China was likely to be a focus of talks behind the scenes, Victoria University of Wellington's New Zealand Contemporary China Research Centre director Jason Young said.
"Both prime ministers have recently visited China," he told AAP.
"They had, at least, public-facing, very good visits to stabilise and manage the economic relationship.
But at the same time, there's a bunch of particularly regional security issues which have an impact on both countries."
The pair are also set to discuss the impact of the US President Donald Trump's tariffs.
While Mr Trump raised tariffs against dozens of nations, he showed mercy on Australia and kept levies against most products at 10 per cent.
But NZ was not spared and was hit with a 15 per cent "reciprocal" tariff.
At the most recent leaders' meeting in Canberra in 2024, Mr Albanese and Mr Luxon discussed migration and creating a closer defence partnership.
David Capie, another professor from Victoria University of Wellington, said the Luxon government had leaned into its partnership with Australia since coming to power.
"You've got a New Zealand government that wants to do more with Australia," the NZ foreign and defence policy expert told AAP.
"The up-ending of the economic order with the Trump tariffs, the Middle East - all of those things NZ and Australia are finding that they're very closely aligned."
Yet deportation remains a point of friction, as NZ has long protested Australia deporting criminals with Kiwi passports but stronger ties to Australia.
After the 2024 meeting, the two leaders agreed to "engage closely" on the matter.
Prof Capie said the issue hadn't faded away completely but was being more delicately handled than during the Morrison government era.
"You had a lot of deportations and a government that was basically basking in it," he said.
"But more importantly, the structural changes to the rights of New Zealanders to be able to find a pathway to citizenship mean that there are going to be fewer and fewer over time."
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