Canada’s economy grew at an annualized pace of 2.9% in the third quarter that runs between July and September.
The year-over-year growth of 2.9% was a slowdown from annualized growth of 3.2% recorded in the second quarter of this year, said Statistics Canada, which released the data.
On a quarterly basis, Canada’s gross domestic product (GDP) grew 0.7% in Q3, beating out the federal statistics agency’s preliminary estimate of 0.4% growth.
Statistics Canada said that a decline in consumer spending due primarily to rising interest rates was the main reason for the slowdown in economic growth during the third quarter.
Specifically, household spending in Canada contracted for the first time since the second quarter of 2021, declining 0.3% in this year’s third quarter.
Economic growth in Q3 was led by an increase in exports, non-residential structures, and business investment in inventories. The rise in exports was driven by an increase in crude oil shipments abroad.
A majority of economists forecast that Canada’s economy will slow even more in the fourth quarter in response to rising interest rates.
Since March, the Bank of Canada has raised interest rates six consecutive times, bringing its trendsetting overnight rate to 3.75%, its highest level in more than a decade.
The Bank of Canada next decides on interest rates December 7. Economists are forecasting a quarter or half percentage point increase at that meeting of the central bank.