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Construction workers strike in Montreal on June 17, 2013.Paul Chiasson/The Canadian Press

The Canadian economy is expected to pick up in the third quarter as rebuilding of flood damaged areas in Alberta and the end of a construction workers strike in Quebec are expected to boost growth, according to the Royal Bank of Canada.

Despite the improvement, however, RBC chief economist Craig Wright said business investment spending and exports are expected to remain hesitant.

"For the global economy and maybe in particular for Canada's economy, if it weren't for bad luck we'd have no luck at all," he said.

The updated outlook by the RBC puts the economy growing at 3.4 per cent for the third quarter, compared with a forecast in June for a gain of 2.9 per cent.

The bump up comes after a second quarter that was weaker than expected with growth at 1.7 per cent, held back by a number of one-time factors including the flooding in Alberta and the Quebec construction strike.

RBC had expected the second quarter to come in at 2.1 per cent.

"It is just a shuffling from one quarter to the next of some of these special factors," Wright said.

On the positive side, he said the housing market has been stronger than expected.

The Canadian Real Estate Association raised its 2013 outlook for homes sales on Monday and reported an 11.1-per-cent jump in August sales compared with a year ago.

"But going forward we expect that to pull back," Wright said.

The RBC outlook predicted the global economy is headed for stronger growth in the second half of the year, helped by improvements in Europe and the United States.

The report suggested that if the trend continues, 2014 may see the world's advanced economies drive global growth more than the emerging economies.

The more positive outlook comes as worries about a new financial crisis in Europe and a hard landing for the Chinese economy recede and fears about the U.S. slipping back into a recession diminish.

However, Wright said those risks have been replaced by others, including the ongoing conflict in Syria and the upcoming debates in the U.S. over its debt ceiling.

The uncertainty is holding back investment, he said.

RBC's outlook is being released as the top policy-setting body at the Federal Reserve begins a two-day meeting in Washington, D.C.