The Canadian economy closed out the last decade with a higher-than-expected bump in its real gross domestic product, a signal that it's well on its way to recovering from the recession.

Statistics Canada reported Monday that real GDP grew 1.2 per cent in the final quarter of last year, powered by four consecutive monthly advances.

Real GDP is defined by the statistics agency as the total value of goods and services produced in Canada during a given period.

Last year's fourth-quarter gain was the largest quarterly increase in real GDP seen since the third quarter of 2000.

Don Drummond, chief economist for TD Bank, said the Statistics Canada figures were even more encouraging when looked at in detail, with increases in almost all key sectors of the economy.

"I think unambiguously we are seeing a recovery from this terrible recession of 2008 and 2009," he told CTV News Channel's Power Play. "This was really solid growth."

Calculated as an annual growth rate, real GDP grew by 5 per cent, which beat projected outcomes, said BNN's Michael Kane.

"Bloomberg News did a survey and said that it would rise by about 4.2 per cent, of course the Bank of Canada's target is 3.3 per cent," Kane said. "So, to come in at 5 per cent is quite something."

The annualized 5 per cent gain seen in Canada compared to a 5.9 per cent increase over the same time period in the United States.

The Statistics Canada figures show that for a third straight quarter, personal and government spending, combined with investment in residential structures, boosted growth in final domestic demand.

Exports and import volumes were also up, though export levels increased faster (3.7 per cent) than import levels (2.2 per cent) in the fourth quarter.

But Drummond sounded a note of caution, saying that a weaker than expected U.S. economy could still drag Canada onto a slower recovery track.

"We do have some hurdles," he said. "We got dragged into this recession largely by what went on in the United States, in their housing and financial markets, so it's not surprising that our greatest vulnerabilities coming out of it are with the United States. And there are a lot."

He said the U.S. housing market is still shaky, commercial real estate is doing poorly and financial markets remain wobbly, all factors that will affect Canada's economy.

"I do anticipate that the pace of the recovery will pull back in the United States and that will spill over ... to slower growth in Canada."