The Federal Statistical Office says Germany posted a better-than-expected budget surplus in 2012 despite a contraction in the fourth quarter as Europe's largest economy continued to weather the financial crisis.

The office said in a release Friday that Germany posted a 0.2 percent surplus for 2012 under official EU debt criteria — better than the 0.1 percent predicted in January.

It's the first balanced budget for Germany since 2007 when it also posted a 0.2 percent surplus, thanks to lower unemployment, higher tax revenues and low borrowing costs.

The Statistical Office confirmed Germany's economy shrank 0.6 percent in the fourth quarter of 2012, for overall annual growth of 0.7 percent. The economy is expected to grow in the first quarter of 2013, keeping Germany out of recession.