The economic slump in Spain has entered its second year in the second quarter, but is showing some signs of abating.

The National Statistics Institute, known as INE, said on Tuesday the contraction in GDP eased to a-tenth of a percent in the second quarter from a quarter earlier when the economy shrank 0.5 percent.

On the downside however, weak domestic demand and looming fresh austerity measures mean a sustained recovery may still be far off. We are seeing signs of improvement in economic activity these include the first drop in unemployment in two years in Q2.

Spain's Economy Minister Luis de Guindos has already announced that the recession has come to an end, but this is not yet enough to convince economists.

They believe the second quarter improvement was largely due to temporary factors such as the comparison with a very weak first quarter and strong trade data, which includes seasonal tourism.