Gross domestic product (GDP) rose 1.1 percent year-on-year in the three months to December from zero growth in the previous quarter, the Ministry of Trade and Industry said.

On a quarter-on-quarter basis, the trade-dependent economy expanded by a seasonally adjusted annualised 1.8 percent, reversing a revised 6.3 percent contraction in the third quarter. The figures are based on estimates.

Analysts feared the economy had likely slipped into a technical recession -- two successive quarters of contraction -- after Prime Minister Lee Hsien Loong said in a New Year's Day speech that GDP rose 1.2 percent for the full year.

This was below the government's target for the economy to expand 1.5-2.5 percent.

"Overall growth of just over 1.0 percent is low by historical standards but it's still growth," said Song Seng Wun, a regional economist with CIMB Research.

The manufacturing sector shrank by an annualised 10.8 percent quarter-on-quarter as the European debt crisis and the sluggish US economy weakened global demand. Manufacturing contracted by 0.2 percent in 2012.

Construction also contracted 8.9 percent quarter-on-quarter but grew 8.8 percent on year. The services sector expanded 1.2 percent overall in 2012.

Premier Lee in his speech on Tuesday said GDP was expected to grow 1.0-3.0 percent in 2013 due to expected continued weakness in global demand.

Copyright AFP (Agence France-Presse), 2013