The Spanish economy came close to stabilising in the second quarter of this year according to the central bank.
The Bank of Spain estimated that GDP shrank just 0.1 percent between April and June from the previous three months.
That supports the view of Prime Minister Mariano Rajoy and his government that there could be a quicker than expected recovery from recession.
They have been talking about economic growth in the third quarter instead of the fourth.
The Bank of Spain said GDP probably dropped 1.8 percent in the second quarter year-on-year. It fell 2.0 percent in the first three months of the year, when it shrank 0.5 percent quarter-on-quarter.
The central bank also spoke about indications of an improvement in spending over the next few quarters, which could help lift the economy from its slump.
Economists still believe any recovery in Spain will be muted.
“Recent data flow has shown quite an improvement… consistent with some stabilisation in GDP, but not yet consistent with growth,” economist at Deutsche Bank Gilles Moec said.
“But the Spanish government is still very far from completing its fiscal adjustment, so there will be a ceiling on domestic demand for two or three years.”
The experts also thing that while the recession may be nearing an end, job creation could still be months away.
Spanish unemployment in the first quarter was a record 27 percent, though is expected to fall for the first time in almost two years in the second, helped by a strong tourist season.