The national cabinet will convene on Tuesday to discuss Omicron, which has already found its way into Australia with five cases suspected in NSW and the Northern Territory.
"Omicron ... may pose some setback to the strong post-lockdown recovery under way," RBC Capital Markets chief economist Su-Lin Ong said.
"Given the Delta experience, we would expect policy makers to assume the worst, move quickly, and take an overly cautious approach, which appears to be emerging."
But Business Council of Australia chief executive Jennifer Westacott has warned Australian governments against over-reacting to the new strain.
"The worst thing we can do is panic," Ms Westacott told Melbourne's 3AW radio on Monday.
"The worst thing we can do is stall the economic momentum, particularly for small business."
She said small business has just been through hell with the economy "stopping and starting" due to lockdowns.
Ms Westacott said Australia has had enough experience handling the virus without needing state-wide lockdowns and border closures, and a more uniform, targeted approach should be taken if needed.
"And, for God's sake, can we have the same rules across each state?" she added.
Infectious diseases expert Peter Collignon said fear of the new variant was "out of proportion to the data at the moment".
But it is not all bad news, with concerns surrounding the emergence of Omicron sending global oil prices reeling $US10 a barrel on Friday.
"Last week's fall in global oil prices could offer some welcome respite to beleaguered Aussie motorists heading off on road trips as school and university holidays kick-off in the coming weeks," Commonwealth Securities senior economist Ryan Felsman said.
As it is, the Australian Institute of Petroleum reported the national average unleaded petrol price rose by 4.2 cents last week to a record high 170.4 cents a litre.
The national accounts for the September quarter due on Wednesday will show the impact on the economy of having NSW, Victoria and the ACT in lockdown fighting the Delta variant.
At this stage economists are predicting a 2.5 per cent economic contraction, although figures released on Monday suggest there is some downside risk to this outcome.
Australian Bureau of Statistics figures showed business inventories - stock on shelves in warehouses - declined by a larger than expected 1.9 per cent in the September quarter.
This would represent a 0.7 percentage point subtraction to activity.
"Lockdowns are a supply-shock, and it is to be expected that inventory levels are rundown somewhat," Westpac senior economist Andrew Hanlan said.
However, company profits rose four per cent in the quarter despite half the nation having been under strict restrictions.
The ABS said the company gross operating profits result included government subsidies such as stimulus packages provided by state and federal levels of government.
The business indicators report also showed wages and salaries declined 0.8 per cent in the quarter, which Mr Felsman said was the first decline since national lockdown in June 2020.
The ABS will release international trade and government spending figures for the September quarter on Tuesday.
