February 22, 2016 / 3:38 PM / a year ago

Canada gov't cuts growth forecast, to run big budget deficit

OTTAWA, Feb 22 (Reuters) - Canada's new Liberal government, citing a sluggish economy and low commodity prices, on Monday cut its growth forecast for 2016-17 and said it would run a much bigger budget deficit that initially promised.

Finance Minister Bill Morneau, citing an average of private sector economists' forecasts, said growth in 2016 would be 1.4 percent, down from the 2.0 percent it forecast in November.

He said the 2016-17 budget deficit would be C$18.4 billion ($13.44 billion) while the 2017-18 deficit will be C$15.5 billion. Those figures exclude Liberal spending plans that will be unveiled in the March 22 budget, so the overall deficit will be higher than the figures released on Monday.

$1 = 1.3687 Canadian dollars Reporting by David Ljunggren; Editing by Jeffrey Hodgson

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