The Ontario government says the provincial deficit for next year is expected to be higher than previously forecast as a slowdown in the U.S. economy takes its toll on the province.

The Ontario government has been forced to revise its growth projections for 2006, Finance Minister Greg Sorbara said today.

In his annual fall economic outlook and fiscal review presented to the Legislature this afternoon, Sorbara said the province has reduced its gross domestic product growth projection for the year to 1.6% from 2.3%.

“We’ve seen a slowing in the growth of the U.S. economy — Ontario’s largest trading partner. A slowdown there has an immediate effect here,” Sorbara said in the legislature.

The treasurer added that the high value of the Canadian dollar against the U.S. greenback and soaring energy prices have also been “tough on businesses across Ontario.”

Sorbara said that the reduced growth is a one-time thing.

“By 2008, we expect a return to growth of 3% — just up from the 2.9% projected earlier this year,” he said.

“Private sector forecasters expect Ontario to grow faster than most G7 economies over the 2006 to 2009 period,” Sorbara said.

To help Ontario residents through any possible turbulence, Sorbara said the province would be “fast-tracking a number of infrastructure projects to generate immediate economic activity and job creation.”

While accounting changes left Ontario with a surplus of $300 million in 2005-06, there will be a projected deficit of $1.9 billion in 2006-07 and a $2.2 billion shortfall in 2007-08 followed by a $1 billion deficit in 2008-09.