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UK has already returned to growth, says OECD

Hopes that Britain will avoid a triple-dip recession were bolstered after a leading forecaster said the country had already returned to growth and official figures showed the key services sector expanding at its strongest pace in five months.

 The UK economy will dodge a recession with a return to yearly growth of 0.5pc in the first quarter of this year, according to the OECD.

The UK enjoyed yearly growth of 0.5pc in the first quarter of this year, to be followed by a 1.4pc expansion in the next three months, according to estimates from the Organization for Economic Co-operation and Development.

“The UK is doing fairly well I would say … this avoids a triple-dip in that country,” said Pier Carlo Padoan, the OECD’s chief economist. “We see a global outlook improving after a weak 2012.”

The Paris-based think-tank’s growth projections compared to the UK economy’s 1.2pc contraction in the final three months of last year, as the OECD uses annualised rather than quarterly growth rates. On a quarterly basis, the UK economy shrank by 0.3pc at the end of last year.

The more upbeat outlook was echoed in the US, where officials reported that the world’s biggest economy grew faster than thought in the fourth quarter of last year, at an annual rate of 0.4pc, up from an initial 0.1pc estimate.

The news cheered Wall Street, pushing the S&P 500 share index into fresh highs as it hit 1,567 points at one point, above its 2007 all-time record.

India’s current account deficit (CAD) widened from 5.4 per cent in the July-September quarter to a record high of 6.7 per cent of GDP in the October-December quarter, driven mainly by a huge trade deficit, said a release by the Reserve Bank of India. This is much higher than the 6.4 percent estimated by a Media poll.

 A surge in capital flows helped finance the current account deficit.

 “The pickup in capital flows was mainly due to foreign portfolio investment which rose to USD 8.6 billion during Q3 of 2012-13 from USD 1.8 billion in Q3 of the previous year. While loans availed by banks and corporate sector amounted to USD 7.1 billion, net Foreign Direct Investment (FDI) declined to USD 2.5 billion in Q3 of 2012-13 from USD 5 billion in the corresponding quarter of 2011-12,” the RBI release said.

 Exports growth during the third quarter was muted as compared with a 7.6 per cent growth in Q3 of 2011-12, the RBI release said.

 Imports, however, grew 9.4 per cent, spurred largely by oil and gold imports. This has resulted in the trade deficit widening to USD 59.6 billion in Q3, compared to USD 48.6 billion during the corresponding period of the previous year.