A better-than-expected annual 5.3 per cent contraction of the Slovakian economy in the second quarter was hailed on Thursday as a sign that central Europe’s less troubled economies may be showing early signs of recovery.

Slovakia, the largest per capita car producer in the EU, has been hit hard by plummeting demand in Germany, its main export market, but the second quarter flash estimates were an improvement on the 5.6 per cent annual contraction recorded in the first quarter.