(Adds economic estimate of impact of virus restrictions)
By Swati Pandey
SYDNEY, July 22 (Reuters) - Residents of Australia's second most populous city, Melbourne, must wear masks when leaving home from Wednesday as the country posted a record rise in novel coronavirus cases while New South Wales state was on "high alert".
Australia recorded 501 new coronavirus infections in the past 24 hours, its highest since the epidemic took hold in March. Its death toll also rose by 2 to 128.
Victoria state, of which Melbourne is capital, accounted for most of the new cases, with 484.
Worryingly, more than half the people who tested positive for the virus in Victoria between July 7 and July 21, or more than 2,000 people, did not isolate, Victoria Premier Daniel Andrews said.
"That means people have felt unwell and just gone about their business," Andrews told reporters.
"They have gone out shopping. They have gone to work. They have been at the height of their infectivity and they have just continued on as usual."
Andrews warned that the number of cases would stay on an upward trajectory if people did not self-isolate after getting tested.
"And a six-week shutdown will not be for six weeks. It will run for much longer than that."
Cross-border travel between Victoria and New South Wales (NSW) will only be allowed for work, education or medical care, after the border was closed this month for the first time in 100 years.
Staff and students travelling from Victoria into NSW to attend boarding schools or universities are required to self-isolate for two weeks and test negative for the virus, while seasonal workers from Victoria are barred.
ECONOMIC HIT
Melbourne has seen a rapid increase in the number of coronavirus cases in recent weeks, with the virus spreading to many aged and nursing homes and some prisons.
Victoria has recorded more than 6,700 coronavirus infections, more than half of Australia's total.
The re-introduction of measures to halt the spread of the virus in the state will shave 0.75 percentage points off the country's economic output in the third quarter, said a government source familiar with official estimates. the death rate in Australia has been lower than that of many of its rich-world peers, authorities and policymakers are increasingly worried about the spread of the virulent disease in Melbourne.
In NSW, of which Sydney is capital, 16 new cases were recorded with Premier Gladys Berejiklian saying the state was on "high alert" because of community transmissions and infections appearing in new places.
She raised concern about a Black Lives Matter protest planned for next week.
"Irrespective of the issue, we need to follow the health advice. Large crowds are a huge concern. We cannot allow that march to continue unfortunately," Berejiklian said.
"We're at a critical point in New South Wales and we don't want to see the virus spread and actions like that are a huge health risk."