Although the country's most populous state has few Covid-19 restrictions in place, businesses around NSW have been forced to close due to virus-induced staff absences.
Spending data analysed by ANZ last week indicated economic activity plummeting to levels lower than any other time during the pandemic.
"We're now facing economic situations that are worse than if we'd had an actual lockdown," said economist Jim Stanford, director of the Centre for Future Work.
The Centre for Future Work is part of the Australia Institute, an independent think-tank funded by donations.
With cases expected to peak in mid-January, analysts from Standford's team have predicted up to a third of workers in NSW could be in isolation in the weeks ahead.