Canada's economy grew at a much more modest annualized rate of 1.7 percent in the third quarter, as Canadians curbed their spending, the government statistical agency said Friday.

Exports fell while imports were flat, business investment weakened, and household outlays pulled back slightly from the previous quarter, said Statistics Canada.

The figure was close to the 1.6 percent growth analysts were expecting, after a rate of 4.3 percent (revised down from 4.5 percent) was posted in the previous period.

But gross domestic product (GDP) was half that of its neighbor and biggest trading partner, the United States, which came in at 3.3 percent.

The slowdown marks the end of a rally for the Canadian economy that had, until now, lead its peers in the Group of Seven industrialized nations (G7).

"Canadian growth was always poised to cool after a monster first half, and the 1.7 percent pace in Q3 won't surprise anyone," said CIBC Economics analyst Nick Exarhos.

"All told, some great numbers on the monthly GDP front," he said.

According to Statistics Canada, exports fell 2.7 percent, mainly attributable to fewer foreign sales of Canadian passenger cars and trucks, mineral products, consumer goods, and energy products.

Lower imports of goods was offset by an increase in services.

Household consumption grew 1.0 percent, down from 1.2 percent the previous quarter.

It was also the first time since the beginning of 2013 that housing investment (real estate) fell for two consecutive quarters.

Business investment in machinery and equipment, non-residential structures, and intellectual property products, meanwhile, all grew at a slower pace than in the previous quarter.