Euro zone's fourth largest economy, Spain, sank deeper into recession in the first three months of the year, but the executive director of the currency bloc's largest bank, sees green shoots appearing in the economy from the next quarter.
"[In the] second quarter of 2013, we will see the bottoming of GDP [gross domestic product] growth - and later in this year - third or fourth quarter - we will start seeing positive consumer demand," Juan Rodriguez Inciarte, executive director of Santander, who was on a visit to Tokyo on Friday to promote Spain as an investment destination, told CNBC.
(Read More: Reasons to Believe Spain's Recovery Is Not Far Away)
Market watchers expect the country to show positive growth rates by the final quarter of the year, as consumption and exports recover.
The economy contracted 0.5 percent in the first quarter - compared to the previous three-month period - the seventh straight quarter of economic decline, highlighting the economic malaise seen across the region.
While credit ratings agencies including Standard &Poor's (S&P) and Fitch have said further debt downgrades cannot be ruled out, Inciarte said he believes this is unlikely.
"I don't think that a downgrade will happen to Spain," he said, adding that "ratings agencies are always behind the curve."
Spain's credit rating was last downgraded in October 2012, when S&P cut it to BBB-, one level above junk, from BBB , on concerns about deteriorating public finances.
The country's budget deficit is expected to reach 6.3 percent of economic output this year, higher than an earlier 4.5 percent target.
"For the first time Spain has a positive balance of payments, we're exporting more than we're importing. That means the level of debt is being reduced," he said.
"Second thing, we have done huge restructuring on the financial sector and we have one of the strongest financials sectors in Europe right now," added Inciarte.
(Read More: Spain 'Throws in the Towel' on Austerity)
The International Monetary Fund plans to send two missions to Spain in the coming weeks to review the country's banking sector and conduct a national annual economic assessment.
The country's government bond market, however, does not appear to reflect any major concerns over the economy, with the 10-year Spanish yields at 4.28 percent - down from 7.75 percent seen less than a year ago, in July 2012.
— By CNBC.com's Ansuya Harjani.