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(Adds details on government transfers, paragraph 5)
OTTAWA, Nov 30 (Reuters) - Canada's current account deficit shrank in the third quarter, but not by as much as expected, as an improvement in trade was partly offset by a higher deficit on cross-border investment flows, according to Statistics Canada data released on Monday.
The current account gap fell to C$16.21 billion ($12.10 billion) in the third quarter from C$16.57 billion in the second, sharply revised from an initially reported C$17.40 billion. The figures are seasonally adjusted.
The median forecast in a Reuters survey of economists was for a C$15.30 billion deficit in the third quarter.
The deficit in the international transactions in goods dropped to C$5.10 billion from C$6.38 billion, while the deficit in trade in services fell by C$148 million to C$5.61 billion.
However, the investment income deficit rose to C$4.21 billion from C$3.62 billion. The third quarter also registered an increase in international government transfers abroad, reflecting things like foreign aid.
Reporting by Randall Palmer; Editing by Bill Trott