Frydenberg has also hinted at extensions to the JobKeeper and JobSeeker payments in the wake of the Melbourne outbreak.
Victoria has recorded 134 new coronavirus cases, as five million people in the state prepare to enter lockdown for another six weeks.
Premier Daniel Andrews on Wednesday confirmed 11 cases were linked to known outbreaks and 123 were under investigation.
In May, Frydenberg warned a return to shutdowns across the country would cost $4 billion per week, and this morning he said the lockdowns would account for about a quarter of that.
“The cost to Victoria is up to $1 billion a week, and that will fall heavily on businesses,” he said.
“It will impact on the numbers in terms of our forecast for growth, for unemployment, and as I say, Victoria is a big part of our economy.”
The Government will deliver an update on the economy in two weeks. The Treasurer said the Victorian crisis was being factored in to decisions that were taking place.
Banks are extending loan repayment relief for struggling customers as Melbourne’s coronavirus outbreak delays the national economic recovery.
Frydenberg is also reassessing the future of the JobKeeper and JobSeeker welfare programs, which are due to expire in September.
“There is going to be another phase of income support,” he told the Seven Network on Wednesday.
Victorian Premier Daniel Andrews is confident the pandemic payments will be extended, saying the prime minister understands there will be more hardship and pain in his state.
“I’m confident there will be support there,” he told the Nine Network.
New lockdown measures across Melbourne will cost the economy up to $1 billion a week.
“This is a serious impediment to the speed and the trajectory of the nation’s economic recovery, not just Victoria,” Mr Frydenberg told Sky News.
The treasurer will release an economic update or “mini budget” on July 23.
The update will be released alongside a review into JobKeeper and JobSeeker payments.
Shadow treasurer Jim Chalmers said the Victorian outbreak and subsequent six-week lockdowns must be taken into account.
“This outbreak and these necessary new restrictions come with even more uncertainty for businesses and their workers, making the case for clarity on the future of JobKeeper even more urgent,” he told AAP.
“Scott Morrison has only added to the uncertainty by delaying the release of his secret JobKeeper review.
“The government should better target and taper support, but shouldn’t turn off the tap when businesses are struggling with new restrictions.”
Hundreds of thousands of customers have paused repayments on loans throughout the pandemic.
Banks are offering to extend the six-month deferrals for another four months, but only for customers who genuinely need emergency assistance.
“Banks are pledging to make sure that no customer falls off a cliff at the end of that six months,” Australian Banking Association chief executive Anna Bligh told ABC radio.
“Where the customer is unable to pay anything because they’re still affected there will be an extension of another four months.”
Melburnians will be forced back into lockdown from midnight on Wednesday, after the city experienced weeks of rising coronavirus infections, including a record 191 new cases on Tuesday.
-AAP, additional reporting ABCJump to next article