When one allows for some of these factors, the downward movement in commodity prices in the past 25 years is not as dramatic as it appears at first. But I can certainly appreciate that the sharp drop in these prices in 1997-98, associated with the Asian financial crisis, has had an especially strong impact on many Canadians’ sense of well-being.
Adjusted for inflation, commodity prices hit a new post-war low during this period and led to a substantial depreciation of our currency. What does the future hold? So far, I have argued that high inflation, large government deficits, slower productivity growth, and lower commodity prices have tended to complicate Canada’s economic situation over the past 25 years.