By Colin Packham, CANBERRA, Dec 11 (Reuters) - Australia must loosen COVID-19 restrictions to bolster its economic recovery, Treasurer Josh Frydenberg said on Saturday, even as daily infections rose to a six-week high.

"States need to keep calm and carry on. And not overreact to the Omicron variant," Frydenberg told reporters in Melbourne.

Australia is one of the world's most vaccinated countries, with nearly 90 per cent of people over 16 fully inoculated. Still, Australia said it found 1,753 COVID-19 cases in the past 24 hours, up about 3 per cent in the last week and the highest daily total since Oct 29.

Frydenberg said state and territory leaders must loosen curbs implemented to slow the spread of the virus, emphasising the need to accelerate Australia's economic growth while he played down concerns about the Omicron variant.

"Our economic recovery depends upon it. We have the vaccination rates now at record highs and that has proven to be a vital defence against Covid."

While some measures have been eased as vaccines were rolled out, interstate travel is still prohibited between several states and capacity limits in shops and restaurants are strictly enforced.

Australia's A$2 trillion ($1.4 trillion) economy was badly damaged by lockdowns in the country's two largest states with gross domestic product falling 1.9 per cent in the third quarter.

Economists and policymakers expect Australia's economy to rebound sharply in 2022 as it reopens its international borders, boosting tourism and the education sector.

Australia last month delayed allowing foreign visa holders to enter until at least mid-December. Frydenberg said on Saturday a decision on whether to reopen would be made in the next few days.