THE gloomy economic picture in mainland Europe was a major factor behind the fall in Scottish manufacturing exports in the first quarter of the year.

Figures from the Index of Manufactured Exports (IME), which covers more than 780 companies across various sectors, show a 0.6% decline in real terms between January and March.

Finance Secretary John Swinney said: "There has been a slowdown over the past two quarters. This reflects the ongoing economic uncertainty in the eurozone and a less competitive exchange rate.

"While the European economies continue to struggle, we are seeing the emergence of growth markets in Asia and South America and we have to be prepared to make the most of these opportunities."

Food and drink dipped by 2.9% in the first quarter of 2012 due to the first fall in drink exports since early 2010. That decline comes after two years of almost uninterrupted growth with annual figures for the drinks industry up 9.2%.

Chemicals was the best performing sector in the first quarter of 2012 showing an increase of 2.4% while there was growth in engineering of 1.4%.

The biggest fallers were metals at 6% followed by wood, pulp, paper, publishing and printing at 5.9% then textiles, clothing and leather at 4.6%.

Looking at IME data across a 12-month period there was 4.2% growth overall.

Over the year textiles increased 12.2%, food and drink by 8.8% rise, chemicals 5.2%, engineering 2.8% and other manufacturing by 3.8% while wood, pulp, paper, publishing and printing was the biggest faller at 13%

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "After a period of flat export growth in the second half of 2011, it is disappointing that exports have dipped into negative territory at the beginning of this year.

"It seems apparent that much of this fall was due to a weakness in drinks exports and this should underline the need to ensure that our drinks industry is valued and treated fairly by Government, especially in terms of taxation and regulation.

"We must also remember that seven of Scotland's top 10 export destinations are eurozone countries and a more general and sustainable recovery in exports will require the adoption of an effective plan to deal with the continental debt crisis.

"Scotland's manufacturing sector has proved its resilience time and time again during the recession and our businesses are well placed to capitalise on opportunities as and when they present themselves."

Duncan Irvine, head of corporate banking at Barclays Scotland, said: "The first quarter of 2012 saw a reversal in fortunes for the previously strong food and drink and textiles sectors which is illustrative of just how unpredictable the current exporting climate is. The old and new guard of Scottish heavy industry – engineering and petrochemicals – both posted small upturns however performance across the board is disappointingly muted."

"Confidence will continue to be a major barrier, not helped by the recent contraction of the UK and US manufacturing sectors and less than flattering economic predictions of stagnation for Scotland.

CBI Scotland director Iain McMillan said the dip in fortunes was disappointing and added: "It will hopefully prove short-lived as our own surveys suggest industry is more confident about its export prospects for the year ahead."

Scottish export volumes remain around 6.4% below the levels seen prior to the recession in 2008.