Australia’s Dutch Disease More Severe Than Canada’s: Currencies
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The currency market is diagnosing Australia with a worse case of “Dutch Disease” than Canada as the commodity-heavy economies suffer the fallout from slumping prices.
After a decade-long boom in raw materials that pushed up their exchange rates, manufacturing in both countries is shrinking and some economists are drawing parallels to the Netherlands when it became too dependent on natural gas after its discovery there in 1959. Traders are betting Australia, which this year announced the closure of its last auto plant, may be slower to adapt to the current plunge in commodities than its North American cousin.