The growth rate of 0.4 per cent was the weakest since the German economy shrank in the wake of the global financial crisis in 2009 and compared with a 0.7 per cent expansion in 2012. Economists and the government had forecast growth of 0.5 per cent.
The Federal Statistical Office estimated that the economy grew by around 0.25 per cent in the fourth quarter compared with the previous three-month period — about the same as the third-quarter figure of 0.3 per cent. However, an official final-quarter growth number won't be released until Feb. 14.
Germany, unlike many other countries in the 18-nation eurozone, avoided recession as the continent struggled to put its debt crisis behind it. Still, the crisis hasn't entirely passed the country by, and last year's economic expansion was fueled entirely by domestic demand.
"The German economy suffered from the continuing recession in some European countries and from restrained growth of the global economy," statistical office head Roderich Egeler said as he presented the preliminary 2013 growth estimate. "The strong domestic demand could offset those factors only to a limited extent."
German exports grew by a feeble 0.6 per cent last year, following growth of 3.2 per cent in 2012. Imports were up 1.3 per cent, little-changed from the previous year's 1.4 per cent.
Private consumption, meanwhile, grew 0.9 per cent — slightly above the previous year's 0.8 per cent. Germans have benefited from a sustained period of low unemployment.
"Overall, we think that there is no reason for massive disappointment today," said Andreas Rees, economist at UniCredit. "When looking behind the sheer numbers, things were being put on the right track last year for 2014."
The economy is expected to pick up speed this year as the eurozone continues its recovery from recession, and the government's current forecast is for growth of 1.7 per cent in 2014. It has forecast that exports — a traditional strength of Germany, which has rejected criticism abroad of its foreign trade surpluses — will be stronger this year.
Germany had a very slight budget deficit of 0.1 per cent last year after turning to a surplus of 0.1 per cent in 2012, the statistical office said. Germany's public finances have been helped by strong tax income as the economy grows, and Chancellor Angela Merkel's government has pledged to stop new borrowing in 2015.