(Bloomberg) -- Australia’s consumer confidence collapsed as Melbourne shifted to Stage 4 Covid-19 restrictions, including a nightime curfew, and a contagion-like effect rolled across the rest of the country.

The sentiment index tumbled 9.5% to 79.5 in August, approaching the lows recorded in April during the peak of the nationwide lockdown, Westpac Banking Corp. said Wednesday in a statement. Reflecting nervousness spreading beyond Victoria’s borders, confidence plunged 15.5% in New South Wales, the nation’s most populous state.

“Consumers across the nation appear to have been rattled by the developments in Victoria and fear that other states may also succumb to the ‘second wave’ outbreak,” said Bill Evans, chief economist at Westpac. “Our view is that these fears are likely to have become overblown. While consumers are right to be concerned, virus risks still look low outside Victoria.”

Australia is mired in recession and Victoria’s renewed lockdown to try to contain its spiraling infections is likely to extend that into the current quarter. While the state is effectively isolated from the rest of the country due to border closures, worries about renewed bouts of infections is eroding confidence nationwide.

“For now, we feel the August sentiment read should be treated with more caution than usual,” Evans said. “Consumers are clearly fearful of the Covid threat and uncertain about how it will play out. And that will have some bearing on their decisions near term.”

The poll was based on responses from 1,200 people and conducted in the week from Aug. 3-8.

All five component indexes in the survey recorded declines in August, with the largest falls around “expectations for the economy and assessments of time to buy a major item,” Evans said. The “economy, next 12 moths” sub-index recorded the biggest decline, slumping 19% to be down more than 30% since June.

“From a policy perspective the next major event will be the Commonwealth budget which will be announced on Oct 6,” Evans said. “The government’s forecasts for economic growth will be key inputs to budget decisions, including decisions around the need for further stimulus.”

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