Figures for the three months to June show that gross domestic product (GDP) rose by 0.3%.

Annual growth remains sluggish at 0.7%, but the second quarter figure reversed the negative growth of the previous two financial quarters.

GDP, a measure of the total value of goods and services produced in the country, had dropped by 0.3% in the last quarter of 2001 and by 0.9% in the first three months of this year.

It is particularly pleasing to see this, modest, improvement in the health of Scotland's economy

Enterprise Minister Iain Gray

It was the first time since the early 1980s that the country had seen two successive falls in GDP - the definition used by many economists for a recession.

Scotland's economic performance has been running behind the rest of the UK for a while, but this confirmed the extent of the problem.

The major inward investments of the 80s and 90s, which had increased Scotland's dependence on manufacturing, have turned sour - with electronics in dramatic decline.

The latest figures do not guarantee that the economy has turned the corner.

Global economy

But they do give the Scottish Executive breathing space as it formulates an economic policy designed to tackle Scotland's longer-term problems.

The figures showed the Scottish service sector grew by 6.3% over the previous year but manufacturing dropped by 12.5%.

The production sector dropped by 10.7% over the year to June and construction fell by 6.2%.

Enterprise Minister Iain Gray said "Trading conditions have been tough for many firms in recent months as a result of the ongoing uncertainty in the global economy - so it is particularly pleasing to see this, modest, improvement in the health of Scotland's economy."

GDP figures for the UK as a whole showed a 0.6% rise in the second quarter.

The annual growth rate for the UK is 0.9%.

The Scottish National Party criticised the GDP figures and launched an attack on budget forecasts which show an increase in income from business of 22%.

Calling for an explanation from finance and public services minister Andy Kerr, SNP spokesman Alasdair Morgan said: "Does he think the economy will jump out of recession and rocket ahead by 22%,or is this another stealth tax?"