OTTAWA: Canada's economy grew at an annualized rate of 9.6% in the fourth quarter, beating analyst expectations, Statistics Canada data showed on Tuesday, with real GDP expected to climb 0.5% in January.

December's real GDP edged up 0.1%, it's eight consecutive increase, but missed analyst expectations of a 0.3% gain. The quarterly gain, which followed record fluctuations in the two previous quarters, was ahead of expectations of 7.5%.

"There are a lot of moving parts here but overall I would say this is generally better than expected," said Doug Porter, chief economist at BMO Capital Markets.

"This early read on January, if it's even close to correct, is very good news," he added. "It suggests that economy is dealing with this second set of restrictions much better than I think most expected."

Canada's most populous provinces tightened restrictions in December and January amid a harsh second wave of COVID-19 infections.

The Canadian dollar was trading 0.1% lower after the data at 1.2661 to the greenback, or 78.98 US cents, easing back from a rally the previous day.

The Canadian economy posted its largest annual drop on record in 2020, down 5.4% on the year, StatsCan said. Economic activity in December remained about 3.0% below February pre-pandemic levels.