:00:04. > :00:14.world's sixth-biggest economy, and a trip to the Geneva Motor Show.
:00:14. > :00:14.
:00:14. > :00:16.Sally is in the driving seat with Hello, and a warm welcome. You're
:00:16. > :00:21.with World Business Report. I'm Sally Bundock.
:00:21. > :00:24.Here are the headlines: How Brazil's economy is set to
:00:24. > :00:30.overtake the UK as the world's sixth-biggest.
:00:30. > :00:34.And from the Geneva Motor Show, we'll ask the boss of Jaguar Land
:00:34. > :00:37.Rover about the future of car manufacturing in Europe.
:00:37. > :00:47.I'm Rico Hizon in Singapore. Australia's central bank keeps
:00:47. > :00:53.
:00:53. > :00:57.rates on hold, but leaves the door Good to have you with us. Growth
:00:57. > :01:02.figures out today could show Brazil's economy overtaking the UK
:01:02. > :01:05.to become the world's sixth-largest. The South American giant is
:01:05. > :01:08.currently enjoying a boom because of high food and oil prices. Many
:01:08. > :01:12.economists predict the growth will last for some years to come.
:01:12. > :01:18.However, there are warnings for investors who see Brazil as the
:01:18. > :01:23.next place to pile into. The old joke about Brazil is it's
:01:23. > :01:26.the country of the future, and always will be. In the past, its
:01:26. > :01:30.vast mineral wealth and agricultural wealth have tended to
:01:30. > :01:34.be cancelled out by high inflation and government debt, high levels of
:01:34. > :01:40.poverty, and lawlessness. But Brazil's economy has been booming
:01:40. > :01:43.over the past decade, and after a mild recession in 2008, it's
:01:43. > :01:49.rebounded - and its growth has continued to outstrip the average
:01:49. > :01:56.growth of the OECD group of developed economies. If we look at
:01:56. > :02:01.the last eight years, of economic Brazil, everything is going
:02:01. > :02:07.fantastic for this country - from foreign investment, from macro-
:02:07. > :02:11.economic policy, from the middle class, and a very stable government.
:02:11. > :02:13.Brazil's 200 million consumers are an increasingly important export
:02:13. > :02:18.market for the frustrated manufacturers of developed
:02:18. > :02:25.economies. Western investors are increasingly interested in the
:02:25. > :02:29.stocks of Brazil's corporate giant, like oil producer Petrolpros.
:02:29. > :02:32.Analysts warn Brazil is a much more risky place to invest than
:02:32. > :02:36.developed economies. Brazil is an exciting investment area, there's
:02:36. > :02:39.no doubt about it. It is also much more volatile. We look at the
:02:39. > :02:43.volatile market returns in the UK last year, when the FTSE was down
:02:43. > :02:47.around 2%. The Brazilian index was down around 22%. Over the longer
:02:47. > :02:52.period, the Brazilian equities have really done very, very well, but
:02:52. > :02:54.they are definitely more volatile, and hence for higher-risk investors.
:02:54. > :03:01.Brazil's economy has never been on such a roll. The question is, how
:03:01. > :03:03.long will the good times last? The worry is rising prices, with many
:03:03. > :03:09.economists criticising the central bank for reducing interest rates
:03:09. > :03:15.while the inflation rate still tops 5% per annum. There's always the
:03:15. > :03:18.fear inflation could run out of control again.
:03:18. > :03:23.The governor of Australia's central bank says interest rates are
:03:23. > :03:26.appropriate for the moment, as the bank left rates on hold at 4.25%.
:03:26. > :03:29.Let's go to Rico Hizon in Singapore, with more on that. Nice to see you,
:03:29. > :03:38.Rico. Sally. Tell us about this latest move by the Australian
:03:38. > :03:41.central bank. Well, they seem to be quite upbeat
:03:41. > :03:45.about the local economy, Sally, despite the external weakness in
:03:45. > :03:49.the eurozone and the still- recovering economy in the United
:03:49. > :03:54.States. It is the second consecutive month rates have been
:03:54. > :03:58.kept on hold following two rounds of 0.25% rate reductions in
:03:59. > :04:02.November and December, Sally. The bank did not hold a meeting in
:04:02. > :04:07.January. The central bank of Australia remains upbeat on
:04:07. > :04:12.economic outlook thanks to a huge boom in resource inments, as mining
:04:12. > :04:17.companies rush to meet the demands of China and India. And with
:04:17. > :04:23.inflation, Sally, still well contained within the RBA's long-
:04:23. > :04:26.term target band of 2% to 3%, when you talk to analysts, they suspect
:04:26. > :04:30.there could be scope for perhaps one more cut in the coming months.
:04:30. > :04:33.Most economists note that the only change to the central bank's stand
:04:33. > :04:39.was the call for better productivity, which is the only way
:04:39. > :04:41.to keep inflation low. But there were some contrarian views, Sally,
:04:41. > :04:45.with this latest decision by the Australian central bank. They say
:04:45. > :04:50.that to leave rates on hold at levels many times higher than most
:04:50. > :04:54.of the developed world is simply unjustifiable, as most Australians
:04:54. > :04:59.in the country simply cannot afford for the Aussie dollar to remain as
:04:59. > :05:05.high as it is now. They say, if it stays this high for much longer, it
:05:05. > :05:08.will have a devastating effect on jobs and the structure of the
:05:08. > :05:13.economy, especially in the non- resource states. Sally. As you say,
:05:13. > :05:17.it's quite a tricky balancing act. China is, of course, Australia's
:05:17. > :05:27.biggest trading partner. China only saying yesterday they're reducing
:05:27. > :05:27.
:05:27. > :05:32.their growth prospects? Absolutely. We saw China basically downgrading
:05:32. > :05:35.its economic forecast for 2012 from 8% to 7.5%. Still, the Aussie
:05:35. > :05:41.mining companies are very bullish. I spoke with one analyst earlier
:05:41. > :05:46.this week, and he said that despite prices coming off, it is still a
:05:46. > :05:50.very profitable for Aussie mining companies such as Rio Tinto, BHP
:05:50. > :05:54.Billiton, and they will still be making money, despite a slowing
:05:54. > :05:59.economy in China. The margins, they say, are still very wide, and those
:05:59. > :06:02.margins still make a lot of money for the Aussie mining companies,
:06:02. > :06:07.which are basically the linchpin, the backbone, of the Australian
:06:07. > :06:11.economy. Sally. Thanks very much indeed, Rico in Singapore. Let's
:06:11. > :06:16.have a look at some other business stories now. Disruptions are
:06:16. > :06:19.expected on the London-to-Paris Eurostar service this morning. A
:06:19. > :06:23.number of trains have been cancelled after a cable fell on the
:06:23. > :06:27.high-speed line in France, causing major delays last night. Eurostar
:06:27. > :06:32.told passengers with tickets for cancelled trains to exchange them
:06:32. > :06:38.for another day if at all possible. Greece is scrambling to complete
:06:38. > :06:43.its debt swap with private bond holders by Thursday of this week.
:06:43. > :06:46.The Finance Minister warned that the creditors -- warned creditors
:06:46. > :06:50.this was the best deal they would get, and he would not hesitate to
:06:50. > :06:53.use new laws to force them to act if they did not do so voluntarily.
:06:53. > :06:57.A dozen financial institutions from the group will help negotiate the
:06:57. > :07:00.deal. They have already agreed. -- the deal they have already
:07:00. > :07:05.agreed. The British Retail Consortium has
:07:05. > :07:08.warned any revival of sales on the UK High Street is an illusion. It
:07:08. > :07:11.says like-for-like sales fell 0.3% in February, compare would the same
:07:11. > :07:14.time last year. The group says, while food sales rose because of
:07:15. > :07:20.people stocking up in the cold weather, sales of non-food goods
:07:20. > :07:24.continued to fall. Japanese car-maker Nissan is to
:07:24. > :07:27.build a new model at its Sunderland plant in the north-east of the UK.
:07:27. > :07:34.It will create up to won it two,000 jobs. The car will go into
:07:34. > :07:38.production in the middle of 2013. After an investment programme worth
:07:38. > :07:42.nearly $200 million. Eurozone growth figures out later
:07:42. > :07:45.this morning are expected to confirm initial estimates of a 0.3%
:07:45. > :07:55.contraction in the fourth quarter of last year. It would be the first
:07:55. > :07:58.quarterly fall since the second quarter of 2009.
:07:58. > :08:03.Europe's top car executives have descended on Geneva for the annual
:08:03. > :08:08.motor show, where a whole host of new cars will be unveiled. It
:08:08. > :08:12.starts today against a backdrop of austerity in Europe, which means
:08:12. > :08:15.finding buyers for new models won't be easy. Let me tell you new
:08:15. > :08:21.information about this. America, Japan and emerging markets are much
:08:21. > :08:24.more prosperous for the industry. Jaguar, Land Rover, now owned by
:08:24. > :08:27.India's Tata Motors, is comang among the companies to showcase two
:08:27. > :08:32.new vehicles. There are reports of a possible tie-up with one of
:08:32. > :08:36.China's largest car firms, Cherry Automobile. There are rumours that
:08:36. > :08:39.suggest the deal could be worth $2.7 billion. We are struggling
:08:39. > :08:44.right now to try and connect up with the Geneva Motor Show, which
:08:44. > :08:48.does kick off today. I was hoping to speak to, as I said earlier, the
:08:48. > :08:51.CEO, Ralph Speff. We'll try and continue to see if we can link up
:08:51. > :08:53.with him. In the meantime, I want to tell you about the financial
:08:53. > :08:58.markets. Of course, one of the key questions I was going to ask him
:08:58. > :09:01.was whether they are going to do a deal with Cherry Automobile of
:09:01. > :09:03.China. If they were to do that, that would mean they would have
:09:03. > :09:07.local production very close to Shanghai, and of course chine saw
:09:07. > :09:11.one of the most exciting car markets in the world at the moment,
:09:11. > :09:15.with enormous growth and future growth in that market. If we can,
:09:15. > :09:18.we will talk to him in the next few minutes. If we can't, I will talk
:09:18. > :09:22.you through the markets. Maybe we'll talk to him later on BBC
:09:22. > :09:27.World News. We do have him, apparently! The wonders of modern
:09:27. > :09:30.technology. Let's now speak to Ralph Stepff, the chief executive
:09:31. > :09:35.of Jaguar Land Rover. Good to see you. I'm relieved you can join us
:09:35. > :09:38.on the programme. We've talked about you coming up all morning.
:09:38. > :09:42.Cherry Automobile of China - a lot of rumours and speculation you're
:09:42. > :09:46.about to do a deal with them. Is that true? Yeah, there are a lot of
:09:46. > :09:51.rumours in the market. It's absolutely true that we have to
:09:51. > :09:57.have a local partner in China to produce and to get a licence to
:09:57. > :10:00.develop vehicles in China. We are in discussions over the government.
:10:00. > :10:05.Whenever we are prepared and, at the right moment we can inform you
:10:05. > :10:08.about that, I can't reveal the day any -- reveal today any news.
:10:08. > :10:13.right. We will watch with great interest to hear more on that. You
:10:13. > :10:16.make most of your vehicles here in the UK. How important, still, is
:10:16. > :10:26.the European market to you? Because obviously it's a market that's
:10:26. > :10:28.
:10:28. > :10:33.struggling in terms of sales. Europe is a very important market,
:10:33. > :10:39.especially for our customers. They do like the very special
:10:39. > :10:47.combination - the unique combination - of the very special
:10:48. > :10:52.design, engineering excellence, and last but not least, authentic
:10:52. > :10:54.vehicle s. This gives us an advantage all around the world.
:10:55. > :10:59.Clearly you say Europe is very important, you make most of your
:10:59. > :11:02.cars here in the UK, but you want to make cars in China. You've also
:11:02. > :11:08.talked about it a desire to make cars in North America, Brazil.
:11:08. > :11:16.You've just opened a new plant in India. Does this mean you're going
:11:16. > :11:23.to reduce your production here in the UK? Eventually? No, we are a
:11:23. > :11:26.British company. We are producing the majority of our cars in the UK.
:11:26. > :11:30.By the way, there's even an opportunity coming up - because our
:11:30. > :11:40.vehicles are so highly sought after - to increase production even
:11:40. > :11:46.
:11:46. > :11:51.further. Where will you do that? have opportunities to do it in one
:11:51. > :11:55.or the other location. Nevertheless, we could go to China. China is the
:11:55. > :11:59.most important market in the world. There's more than 80 million
:12:00. > :12:06.vehicles. That's clear that we also have to be in China. But we are
:12:06. > :12:12.producing, in China, and we will produce in India and in Brazil, not