Officials are estimating the German economy to have shrunk by 0.25% in the final quarter of 2011.
Over the year, the economy grew by 3% driven by strong growth in the first half, the Federal Statistics Office has said.
The office said the impetus for growth was mainly provided by domestic demand.
Private consumption had grown by 1.5% and demand for cars had been particularly strong, with German car sales rising by 6.1% in December.
Although the expansion in 2011 marked a slowdown in growth from the year before, it is still a strong figure compared with other economies, the BBC reports.
The Organisation for Economic Co-operation and Development expects growth in 2011 of 1.7% in the US, 0.9% in the UK, 1.6% in France and 0.7% in Spain and Italy.
The annual figure was based on an estimate for the fourth quarter, with official data for the last three months due to be published on 15 February.