03/09/2014 World Business Report

Those are the latest headlines from BBC World News. Now for the latest

financial news in World Business Report.

Fighting for survival. As the Japanese economy starts to falter,

so Prime Minister Abe prepares to reshuffle his cabinet and in a bid

to re`connect with the unhappy voters.

Grinding to a halt. Australia's economy sees expansion slow as the

strong currency hits the country's exporters hard and commodity prices

weaken. Welcome to World Business Report.

I'm Ben Thompson. Also in the programme, we talk to

the biggest investor in Ukraine and ask if the country is still an

attractive place to put your money. But first: Japanese Prime Minister

Shinzo Abe is expected to reshuffle his cabinet on Wednesday in a bid to

re`energise his economic and security agenda. Reports say more

women will be promoted and that he will invite his closest rival within

the party to take on a senior position. Abe enjoyed sky`high

public support when he came to power in December 2012 with his approval

rating rising to 76% as his economic plan shows signs of early success.

However, his Three Arrows economic policy that involved massive

monetary easing, spending and reform appears to be faltering now with no

obvious solutions in sight sending his approval rating below 50%. A

little less than two years into his tenure as Prime Minister, rumblings

of discontent in his party are also beginning to emerge.

Joining me now live from Tokyo is Rupert Wingfield Hayes. Just looking

at the share price, shares have risen to a seven`month high site is

the expectation about what he will deliver. `` seven`month high, so

clearly. There is a lot of sentiment.

(INAUDIBLE) I should say, an announcement won't

be made for another hour or so. Maybe the reason the stock market is

going up is because everyone knows who the new people in Cabinet will

be. Here on this page is a list with photographs of all 18 new members of

the Cabinet. This information has been quite extensively leaked with

newspapers and indeed, we will see five women in the Cabinet including

the most significant, Yuko Obuchi, the economic and trade minister.

They will probably have at least five women in the Cabinet and there

will be a big turnover. (INAUDIBLE)

. The top team around the Prime Minister will remain. We spoke of it

in the introduction, this three pronged policy which sounded great

and delivered initially, but then the euphoria wore off, why? In large

part because it doesn't seem to be working, at least it isn't working

as fast or effectively as it might. We are months into the

(INAUDIBLE) . Huge amounts of money was pumped

into the economy three infrastructure and this campaign of

monetary easing by the central bank. (INAUDIBLE)

It has pushed down the value of the yen. Apologies, we will leave you

there, sorry we have had technical problems with the line and we will

try to get back to him later. In the meantime, Australia's economic

growth slowed in the last quarter as the currency strengthened and

commodity prices weakened. Despite efforts by the central bank to keep

rates low to boost domestic demand, the latest GDP reading came in at

0.5%, down from growth of 1.1% in the first quarter. The news comes

just a day after the government announced plans to scrap the

country's controversial mining tax. Let's get more from Rico Hizon. He's

live in our Asia business hub for us now. Good to see you. Talk us

through this. Is this a sign of continued weakness in Australia? The

Saab part performance is forecast to last for another few months as the

economy weather is the winding down of the decade`long boom in mining

investment, which is a major reason why markets expect interest rates to

remain at record lows of 2.5% well into 2015 `` sub par performance.

That is why investors have wagered that if there is a move, it will be

another downward trend in the cost of borrowing. That is why in late

Sydney trade we have seen Australia's main share index in

positive territory by more than five points, despite the slow data. Yet,

more timely numbers suggest the current quarter has seen a pickup in

growth with businesses reporting rising sales and retailers enjoying

better times. Double`digit increases in housing prices have increased

consumer wealth and spending in the face of sluggish wages while

encouraging a surge in home building. This drag on growth was a

sharp rebound in imports mainly of capital goods while exports dipped

slightly. More worrying was a steep fall in prices for Australia's wager

commodity exporter, notably iron ore which took a heavy toll on minor's

income. Currently the numbers we see is a mixed bag `` miners' income. We

expect economic growth to pick up and have consistent trajectory by

mid` next year. OK, good to talk to you. More on that a little later.

Russia isn't the only one grappling with a weakening economy. Ukrainian

President Petro Poroshenko is due to address a conference in London on

Wednesday to encourage businesses to invest in his country. He's likely

to highlight Ukraine's well`educated labour force, large domestic market,

and access to a variety of resources including some of Europe's best

agricultural land and significant coal reserves. But the IMF warned on

Tuesday that it could need billions of dollars in additional support if

the fighting between the military and separatists continues. So why

would anyone invest there now? With me now is Sevki Acuner, Ukraine

Country Manager for the EBRD. The development bank is the single

largest investor in the Ukraine. Welcome to World Business Report.

Times must have been tough recently. Tough and interesting apart from the

treacherous territorial integrity of Ukraine that we have seen in the

east. The financial and economic adjustment programme the country is

going through under the IMF is making it a challenging and

interesting investment area. We continue to be strongly engaged in

Ukraine. We are the single largest investor. This year, we intend to

invest approximately 1 billion euros of new investments in the country

across a variety of sectors including public sector and other

projects. We touched on there in the introduction, one of the attractive

parts of Ukraine, coal, the second`largest producer of coal in

Europe, yet there are suggestions it could run out of coal in three

weeks. If you are facing such infrastructure problems, that makes

basic is must difficult, never mind foreign investment. Don't forget

that Ukraine has plenty of coal resources in the western part. It is

true that at present the mines are under threat and they aren't

operating at full capacity. An overwhelming portion of the country

is functioning normally. I hope this is a temporary difficulty that the

country is having to cope with until this issue is resolved. You deal

with foreign investment. We are hearing mixed messages from Kiev

about what investment they want and what sort of investment is needed in

infrastructure. How hard is it to make investment decisions when there

is such volatility? The message is clear in the sense that the

government is very strictly committed to the reform programme

under the IMF as a mentioned. However, for the businesses, the

adjustment that the financial system is going through is making it

difficult to plan far ahead of time. Nevertheless, the country's inherent

strengths are there and the country's commitment to be part of

the Western economy, the European economy is clear. That is why I

think this conference is important to pass the message once again to

the European and international investors that Ukraine's inherent

strengths aren't diminished by these temporary difficulties. Certainly

something to watch. Thank you very much indeed, from the EBRD.

In other news, The US reported a surge in manufacturing output in

August, helping to support growth in the world's largest economy. The

Institute for Supply Management's index unexpectedly climbed to 59 `

its highest level since March 2011. Home Depot is investigating a

possible security breach that could have leaked shoppers credit cards

details. Several banks say they've uncovered evidence that Home Depot

may be the Origin of a new batch of stolen payment card information. The

cards were posted for sale on the black market on Tuesday morning.

That is all your business from us. Much more next including a look at

the papers. I will see you soon. Welcome back. A bid to safeguard

England's wildflower meadows is backfiring