Given the rapid deterioration in Australia's economic outlook as the coronavirus causes the closure of borders and restrictions on movement, global investment banking giant Goldman Sachs now forecast the sharpest annual GDP contraction since the Great Depression of the 1920s.

The Australian economy will shrink 6 per cent in 2020 versus last year, economists led by Andrew Boak wrote in a report dated March 20.

Cafes in Sydney's CBD are suffering, with spending on hotels, cafes and restaurants expected to more than halve. Credit:Louise Kennerley

Most of the contraction is expected to be driven by a collapse in 'social' consumption, with an assumption that spending at hotels, cafes and restaurants will fall more than half, while spending on many discretionary categories will drop by up to one third.

"As more people work from home, higher spending on food and utilities will provide a modest offset, but investment activity and exports are also likely to contract," the economists wrote.