Dominic Wilson, head of strategy at the $US8 billion ($11.4 billion) New York hedge fund firm MKP Capital Management, said Australia, Brazil and Canada were grappling with the negative income "shock" from lower commodity prices due to the slowdown in Chinese demand and the wind down of the mining investment cycle.

"They are a group of countries being hit by the same external forces and the reversal of some favourable global tailwinds," Mr Wilson said.

Iron ore, the steel-making commodity that has underpinned China's construction of buildings and bridges, has fallen to about $US55 a tonne this week from a peak of about $US188 a tonne in 2011.

The value of Canadian crude oil has been slashed in half.

The price of coal, copper, gas and other mining commodities have also sunk. The pain of the commodity bust has spread to Russia, Norway, South Africa and beyond.

Despite the parallels, Australia, Brazil and Canada each have their own idiosyncrasies, suggesting they are not necessarily on the same path.

Brazil, whose national mining champion Vale competes against the Australian-listed BHP Billiton and Rio Tinto, is hurting the most.


Latin America's largest economy shrank 1.9 per cent between April and June, following a 0.7 per cent decline in the March quarter. Brazil is suffering from the slump in the value of iron ore, oil and soy beans, its three biggest exports.

But the pain is partly self-inflicted.

A $US2 billion corruption scandal at state-owned oil firm Petrobras has engulfed government ministers and executives, hurting business confidence and halting construction approvals for other projects.

The multibillion-dollar windfall from the mining boom was wasted on cheap loans to businesses and individuals and subsidised energy bills. Like the government, consumers ran up huge debt to pay for their profligate spending.

Moody's Analytics senior economist Tu Packard said that like debt-plagued Greece, Brazil made a "big mistake" spending up big to host the 2014 World Cup and next year's summer Olympic Games in Rio de Janeiro.

Brazil is now paying the price for the extravagance, with the central bank being forced to raise interest rates to tame runaway inflation. Tighter monetary policy is hurting the economy.

"Brazil is having the year where everything that could go wrong, has gone wrong in 2015," PNC senior international economist Bill Adams said.

In contrast the central banks of Canada and Australia have taken advantage of their capacity to cushion the slowdown by cutting interest rates, including the Bank of Canada's easing to 0.5 per cent in July.


The Reserve Bank of Australia's overnight cash rate has been cut twice since December to rest at 2 per cent.

The situation in Canada is far from dire, with the unemployment rate at 6.8 per cent, versus 6.3 per cent in Australia.

Australia and Canada are both suffering from a sharp slowdown in business investment, as the non-mining sectors fail to pick up the slack for the fading investments in resources projects in previous years.

Major cities like Sydney and Vancouver are also facing worrying house-price booms as homebuyers take advantage of ultra-low rates, raising concerns about a risky possible property bubble.

The central banks in both countries would prefer a lower currency pulls the economy along, rather than further rate cuts fuelling more property speculation. The Australian dollar and Canadian loonie have fallen 25 per cent and 22 per cent respectively against the US dollar in the past 12 months.

Commodities account for 45 per cent of Australian exports and 48 per cent in Canada, according to the World Bank. The commodities sectors represent 7.4 and 12.2 per cent of GDP respectively.

However, Capital Economics senior global economist Andrew Kenningham said that exporters of industrial metals like Australia are more exposed to slower growth in China than are exporters of oil and gas.

China consumes between 40 and 50 per cent of global aluminium, copper, zinc, nickel, lead and coal, compared with 12 per cent of world crude oil.

MKP Capital's Mr Wilson, who has lived in Australia and co-wrote economic papers with economist Ross Garnaut, said Australia was much more directly exposed to a slowing China, whereas Canada's main oil export market is the recovering United States.

"I would say being reliant on the Chinese growth story is the more difficult place in the next couple of years," Mr Wilson said.

Lowy Institute international economy director, Leon Berkelmans, said commodity booms in Australia had previously ended badly due to inflation blowing out of control, but the floating exchange rate meant the recent boom was "not ending as badly".