Canada's economy grew 3.2 percent in the third quarter, below expectations, as the soaring Canadian dollar drove demand for imports but slashed energy and auto exports, Statistics Canada said on Tuesday. The weaker-than-forecast figures, coupled with a downward revision of second quarter growth, may prompt the Bank of Canada to hold off on raising interest rates next week, analysts said.
Analysts had expected growth of 3.5 percent in gross domestic product in the third quarter, well above the Bank of Canada's measure of full potential at 3 percent.
Statscan revised down the pace of second quarter growth to 3.9 percent from 4.3 percent and also cut first quarter growth to 2.7 percent from 3.0 percent.
The C$1.13 trillion ($950 billion) Canadian economy ended the July-September quarter on a weak note, with no growth in September following 0.4 percent growth in August and 0.3 percent growth in July.
"These numbers are very, very weak and could very well support the bank holding the line on rates," said David Ebata, managing analyst, Thomson IFR in Boston. "The revision to the prior quarter is also a major negative."
The Bank of Canada hiked rates in each of the past two months and, until recently, had been widely expected to raise them again on December 7.
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