MELBOURNE (REUTERS) - Australia's Queensland state on Wednesday (Aug 5) said it would close its border with New South Wales state to hold back a second wave of Covid-19, while the country's second-largest city Melbourne was set to shut most businesses from midnight.

A surge in coronavirus cases in Melbourne has forced the state of Victoria to impose a night curfew, tighten restrictions on people's movements and order most businesses to stop trading from Wednesday night.

Other states are imposing new restrictions of their own to prevent any spillover form Victoria and an even bigger hit to the national economy, which has plunged into its first recession in nearly three decades.

Australia has withstood the pandemic much better than most other countries, with 18,729 cases and 232 deaths in a population of 25 million.

But Victoria, which accounts for about a quarter of the nation's economy, has nearly two-thirds of Australia's coronavirus cases and is expected to report more than 700 new infections on Wednesday, according to media reports.

Queensland Premier Annastacia Palaszczuk, who has already shut her north-eastern state's border to Victorians, said travellers from New South Wales and the capital Canberra would also be barred from Saturday.

"We have seen that Victoria is not getting better and we're not going to wait for New South Wales to get worse. We need to act," Ms Palaszczuk said at a media conference in Brisbane.

After two months of no community transmission in the state, two travellers who returned to Queensland from Melbourne last month tested positive to the virus and there have been at least three cases of local transmission, the state's deputy premier said.

"It is clear now that Australia is experiencing a second wave of Covid-19 and we cannot afford to have that second wave here in Queensland," Deputy Premier Steven Miles said.

Queensland, a popular holiday destination for people from the colder southern states, reported one new and 11 active cases on Wednesday.

Victorians are bracing themselves for the shutdown of a range of businesses from hair salons to furniture stores, and curbs on construction activity, meatworks and warehouses, hitting 250,000 jobs.

In another blow to the economy, Australia's No. 2 airline, Virgin Australia Holdings, said on Wednesday it would axe 3,000 jobs under its prospective new owner Bain Capital.