While the figures reinforced other recent data showing Singapore heading out of recession, concern remained over the performance of goods-producing industries, estimated to have contracted 6.1 percent.

"This was largely due to a decline in the manufacturing sector as a result of sluggish demand for electronics," the ministry of trade and industry said in a statement.

The export-oriented manufacturing sector is the engine-room of Singapore's economy, with electronics accounting for 60 percent of non-oil domestic exports.

Services-producing industries were estimated to have declined marginally by 0.7 percent in the first quarter while other sectors showed "an improvement in line with a pick up in economic conditions," the ministry said.

The first-quarter estimates were computed largely from January and February data, with detailed figures taking in the March performance due out next month.

With Singapore in its worst recession in more than 30 years, the 2.6 percent fall in gross domestic product (GDP) compares favourably against a 6.6 percent drop in the fourth quarter of last year and a 5.4 percent contraction in the quarter before that.

After soaring growth of 9.9 percent in 2000, the GDP shrank 2.2 percent last year.

The government has forecast full-year growth between 1.0 and 3.0 percent for this year with recent data suggesting the trade-driven economy is on the mend as its biggest export market, the United States, crawls out of recession.

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