Hard to say without knowing more. Some dogs are just shyer but a well socialised dog that remains well socialised generally wouldn't start to become fearful. How often is she meeting other dogs? Daily? Weekly? Every couple of weeks?
Socialisation is really important for dogs -- they need to regularly meet other friendly dogs (ideally, daily, on every walk). If they only meet a few now and then, or a few of the same dogs frequently, they can increasingly become more and more poorly socialised. In other words, good socialisation and comfort around other dogs isn't something they learn as puppies and then never forget. Dogs need regular, weekly, positive dog experiences.
Otherwise a dog can become indeed become more and more withdrawn, either more fearful or sometimes, more dog reactive and fear aggressive over time.
If she isn't, I'd recommend making sure she does see dogs regularly -- it is quite an isolated life for a dog to be mostly a people dog and not have the chance to interact normally and regularly with a wide range of dogs (note they can become reactive or increasingly shy if only seeing the same dogs all the time too). They need people and dog interaction to remain normal and healthy mentally and behaviour-wise.
A real problem for adult dogs is that many owners stop getting them out regularly enough and they do become more withdrawn. Over time this can lead to some serious behaviour issues and really, at best, means a lower quality of life for the dog and the owner who suddenly finds they cannot go near other dogs due to their own dog's growing leash aggression or fear. This takes away so much of the joy of having a dog. Speaking as someone with a very leash reactive rescue dog that arrived that way, I can say it is very hard to train away from (as opposed to making the daily/weekly effort to keep a dog well socialised on fun active, dog-filled walks!
) and also means that dog is a constant headache on walks and annoys other people.
On the flip side, some dogs grow into insecure adults for many reasons. Have you done a group training class with her? This is to my mind the single most important thing anyone will EVER do with their dog and is really critical because the dog learns confidence in interactions with both people and dogs and also to carry on doing things with distractions. Home training cannot duplicate this experience in any way at all.
For a dog like this, even if she has done a basic class, I'd be enrolling her for another (positive methods) obedience class or other interactive class (eg like agility if she is over a year now, or nose work, etc). She definitely would benefit and also you could get professional advice. I always recommend looking for a CPDT or APDT-certified trainer class so that the trainers actually have meaningful education behind how they train.
I'm off to a class tonight myself with my pyrenean girl Muffin -- even though she had some home training I could instantly see the benefit of having to start from scratch around a busy classroom! Over an hour she learned to stop focusing on the other dogs and people and instead work more closely with me. That has led to much-improved walks in the week after.
