Melbourne is driving national economic growth on the back of burgeoning finance, construction and health services, with forecasts it will challenge Sydney as the Australian economy’s most important city.

A report to be released on Monday also shows the drought is taking a huge economic toll on parts of Queensland, NSW and Victoria, widening the gap between them and urban Australia as Sydney and Melbourne draw away from rural areas and regional centres.

SGS Economics and Planning found that during 2018-19, the Melbourne economy alone accounted for 40 per cent of Australia’s total growth. Melbourne gross domestic product reached $369 billion compared with regional Victoria's $76 billion.

Melbourne contributed 40% of the nation's economic growth over the past year and is tipped to close the gap on Sydney as Australia's economic centre. Credit:The Age

Australian GDP expanded by 1.9 per cent but Melbourne’s own GDP lifted by 4 per cent. Sydney GDP at $461 billion grew by 2.6 per cent, its lowest rate since 2012-13, to account for a third of national growth.