The Scottish economy has shown a slight growth despite a continued slump in the manufacturing sector, according to a new report.

New figures from the Scottish Executive show that Gross Domestic Product (GDP) rose by 0.6% in the third quarter of last year.

Output in the manufacturing sector decreased by 0.8% in the latest figures, a drop of 12.7% on the previous year.

GDP, a measure of the total value of goods and services produced in the country, had fallen for two consecutive quarters at the end of 2001 and the start of 2002, sparking fears of a recession.

The service sector showed a 5% rise

However, it rose by 0.3% in the second quarter of last year.

When compared to the figure for autumn of 2001, the economy grew at just 0.1%, well below the rate of rate of growth for the UK as a whole at 1.3%.

While the service sector in Scotland continued to grow compared with the previous quarter - up 5% - the manufacturing sector continued to shrink.

The "production" sector - which includes mining and quarrying, energy, and water supply, as well as manufacturing - fell by 0.9% on the previous quarter and 10.8% on the previous 12 months.

For manufacturing alone, the drop was 12.7% compared to the previous 12 months, compared to a 5.2% fall for the UK.

Global difficulties

Enterprise minister Iain Gray welcomed what the executive described as "continued modest growth in Scottish GDP during a period of difficult global economic conditions."

But he admitted to disappointment that there had been only a small level of growth over the 12-month period.

"The global difficulties in manufacturing and the restructuring of the electronics industry have had a significant impact on overall economic growth in Scotland," said the minister.

He argued that if electronics was taken out of the figures, Scotland's growth would have exceeded UK levels.

He defended the executive's strategy of supporting efforts by the electronics industry to be more productive and to operate at the high-value end of the chain.

"Make no mistake, we are absolutely committed to delivering real growth in the Scottish economy that is both long term and sustainable," said Mr Gray.