The German economy, the major driver of euro zone growth, expanded by 1.9% in 2016, the strongest rate in five years.
This is according to a preliminary estimate from the Federal Statistics Office today.
Europe's largest economy is benefiting from rising private consumption and increased state spending on refugees.
This is compensating for a weaker contribution from trade amid sluggish demand from major trading partners and emerging markets.
Economists polled by Reuters had expected growth in gross domestic product (GDP) of 1.8% for 2016 after an expansion rate of 1.7% in the previous year.
The growth rate of 1.9% matched the highest forecast in the poll.
The Statistics Office said it estimated growth was around 0.5% for the fourth quarter.
Analysts said that the German economy in 2016 once again defied an entire series of downside risks, thanks to strong domestic demand.
But they added that Germany's biggest risk now was complacency.
A breakdown of the 2016 GDP figures showed private consumption rose by an adjusted 2% on the year, contributing 1.1 percentage points to the overall 2016 growth rate.
State spending jumped by 4.2% after a rise of 2.7% in 2015. The increased state spending added 0.8 percentage points to the overall growth rate.
Investment in machinery and equipment contributed 0.1 percentage points while construction added 0.3 points.
As exports rose less strongly than imports, net foreign trade subtracted 0.1 percentage point from the overall growth rate.
Germany's Ifo economic institute said last month the economy will rebound more strongly than previously expected in the fourth quarter and this growth momentum will carry on into 2017.