Scottish manufactured exports tumbled by a further 3.4% in the first quarter of 2009, after a 9.6% plunge in the final three months of last year, official data showed yesterday.

Scottish manufactured exports tumbled by a further 3.4% in the first quarter of 2009, after a 9.6% plunge in the final three months of last year, official data showed yesterday.

The latest tumble took manufactured exports to their lowest level since comparable records began in 1995. Exports of transport equipment plummeted by 17% during the first quarter alone. Exports by the electrical and instrument engineering category, which takes in Scotland's much-reduced but still-pivotal electronics sector, fell 3.4% during the quarter.

The export figures from the Scottish Government underline the scale of the challenge facing the economy north of the Border as it strives to reinvent itself in the wake of the disasters that befell Edinburgh-based Royal Bank of Scotland and HBOS amid the global financial crisis.

Strathclyde University's influential Fraser of Allander Institute think-tank last week hammered home the important part that the manufacturing sector, and exports, would have to play as the Scottish economy attempted to recover.

Fraser of Allander, which highlighted a pressing need for Scotland to secure significantly greater investment from overseas companies, voiced its fears last week that the manufacturing sector north of the border might now be too small to take advantage of economic recovery.

Noting manufacturing now accounted for only 14% of overall Scottish economic output, Fraser of Allander said: "A key question here is whether Scottish manufacturing in particular has the size, diversity and capability to take advantage of a recovery.

"This poses a policy challenge to the Scottish Government and its economic development agencies as well as to the private sector in Scotland."

Comparing the 12 months to March 31 with the preceding four quarters, Scottish manufactured exports were down 6.5%. During the first quarter alone, Scotland's metals sector suffered a 6.5% fall in exports.

The textiles, fur and leather sector's exports fell 12.7% during the opening three months of this year. Overseas sales of the wood, pulp, paper, publishing and printing industries dropped by 7.0%. The chemicals, coke, refined petroleum products and nuclear fuel category suffered a 6.5% drop in exports during the first quarter.

The drinks industry, however, bucked the falling trend with a 5.8% rise in exports during the first quarter.

Peter Hughes, chief executive of industry body Scottish Engineering, said yesterday: "Whilst the latest manufactured export figures are dis-appointing, they are not un-expected, particularly in the hard-pressed engineering and metals sector. It is pleasing to note that the food and drink sector has seen some growth, but it is also worth noting that our electrical and instrument engineering sector, which incorporates electronics, still exceeds the total exports from the entire drinks industry."

He added: "Scottish engineering companies are currently working extremely hard to keep costs under control whilst attempting to retain their highly-valued workforce, who will be vitally important when we eventually emerge from the current recession."

Liz Cameron, chief executive of Scottish Chambers of Commerce, highlighted signs that the boost to Scottish manufacturers' competitiveness in overseas markets from the weaker pound continued to be outweighed by the fall in global demand.

She said: "Although these figures are disappointing, the rate of decline in Scotland's manufactured exports seems to have become more shallow in the early part of this year. One of the main difficulties for our manufacturing businesses looking to export their products abroad has been a reduction in demand across virtually all inter-national marketplaces, meaning that, despite the favourable exchange rates earlier in the year, firms have been finding it challenging to boost overseas sales.

"This reduction in the rate of decline is welcome, but it is still too early to confidently make predictions as to whether the corner has been turned."

Cameron added: "Manufacturing remains a vital industry within the Scottish economy and its strength will provide a key indicator to our overall economic health."

Lesley Sawers, chief executive of the Scottish Council for Development and Industry, said of the latest fall in exports: "It's disappointing but hardly surprising that we continue to see a fall in demand in overseas markets, given the slowdown in Scotland's key export markets.

"But Scotland still exports more than £13bn of manufactured goods each year and, despite the economic situation, there are opportunities for Scottish companies in sectors such as pharmaceuticals, renewable energy, and food and drink."