Germany’s economy was hit hard by the eurozone crisis in the final quarter of last year.
As traditionally strong exports and investment slowed, GDP shrank by 0.5 percent – more than at any point in nearly three years.
That pushed overall growth for the year down to 0.7 percent, a sharp slowdown from 3.0 percent in 2011.
Economists expect Germany to bounce back after forecasts for weak growth in the first quarter.
“The German economy might not be an island of happiness any longer but it remains at least an island of growth in a still recessionary eurozone sea,” said ING economist Carsten Brzeski.
An official at the Economy Ministry said growth would likely be 0.4 percent this year, less than half the government’s existing forecast of 1.0 percent. The government is due to publish an estimate for 2013 growth on Wednesday.