The weaker than expected activity was driven by staff shortages, supply chain disruptions and weakened consumer confidence from the COVID-19 Omicron variant, with credit reporting agency CreditorWatch expecting trade activity to slide throughout the first half of 2022.
In an address to the Davos World Economic Forum on Friday night, the prime minister spoke on the acceleration of the digital economy, the demand for skilled workers and closer collaboration between business and researchers.
"When COVID hit, the digital economy went boom. Adaptation and innovation was immediate. Australia jumped five years ahead in digital adoption in almost the blink of an eye," Mr Morrison said.
"In Australia, we estimate that increased digitalisation could add some $90 billion to our economy - as well as create some 250,000 jobs in the near future."
He lauded the country's high vaccination and low unemployment rates while setting out an economic pathway focused on driving innovation and ensuring an open and free market.
"In recent times Australia has experienced the effects of economic protectionism and coercive measures. The world cannot afford to march in this direction ... it's hard to see how anyone wins," he said.
"From the outset, our Government was very clear that we were backing a business-led recovery."
But CreditorWatch's business risk index report for December said Christmas trade activity was the lowest on record, down 45 per cent from December 2020.
"Everyone was expecting that the rapid spread of Omicron would have a significant adverse impact on Christmas trade, but few would have predicted it to be this extreme," CreditorWatch CEO Patrick Coghlan said.
"You can't blame people for wanting to stay at home. We can only hope that the peak arrives soon, and the business community can get back on its feet."
However, its business risk index - which gauges the probability of default over the next 12 months - was down slightly in December at 5.7 per cent compared with 5.79 per cent in November.
The index covers 300 regions across the country.
Newcastle and Perth were the two metropolitan centres that have bounced back the strongest from the pandemic, compared with Melbourne which continues to struggle from the extended lockdown in 2021.
More broadly, defaults, external administrations and court actions all dipped in December after sharp rises in November.
"The Australian economy undoubtedly bounced back in the December 2021 quarter and carries some momentum into 2022 but it is enduring a bumpy ride as Omicron bites," the report says.
"With such high vaccination rates we will push through, but many SMEs have been hit hard."
Meanwhile, the Australian Bureau of Statistics reported business turnover in 12 out of 13 industries increased in November, on the back of restrictions easing in the biggest states.
Accommodation and food services recorded the largest increase (15.9 per cent) in monthly turnover compared to October 2021, the figures released on Friday showed.
The second greatest month-on-month increase was for the arts and recreation services industry (14.1 per cent).
All industries had year-on-year increases.
Construction rose nine per cent following a fall in October, and was up 15.1 per cent over the year to November, while mining turnover was up 29.5 per cent over the year.
