27/06/2014 World Business Report


27/06/2014

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Tuesday. Those are the latest headlines from

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BBC World News. Now for the latest financial news in

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World Business Report. The trade deal that sparked a

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revolution. Ukraine to sign the EU pact it hopes will transform its

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struggling economy. Plus the next generation of billionaires ` we meet

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the young Indians on the road to riches.

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Welcome to World Business Report. It has a fascinating snapshot of

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everything in the world of business and money. In a minute, Japan sees

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the highest inflation for 32 years, so is Abenomics finally working? But

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first, we start in Ukraine ` which is due to sign a political and trade

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accord with the European Union later this Friday. It represents a

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historic shift for the country away from Russia and towards the West.

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It's also a victory for pro`European Ukranians who ousted Russia`backed

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president Viktor Yanukovych earlier this year when he abandoned the deal

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` sparking the current crisis. The Association Agreement, as it's

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known, will open up European and Ukrainian markets to each other over

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the next decade, and see Ukraine adopt EU standards on everything

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from food additives to copyright protection.The EU says it will boost

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exports to Europe by a billion euros or 1.35 billion dollars a year, and

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save Ukrainian firms 685 million dollars a year in customs

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duties. But Russia has threatened to punish Ukraine economically if it

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signs. Ex`president Yanukovych argued it would cost 500 billion

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dollars in lost trade with Russia. And, cost another billion to

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implement EU standards. Either way, Ukraine's economy desperately needs

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a boost. It has been tipped deep into recession by the political

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crisis, the IMF predicts GDP will slump five per cent this year.

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Ukraine's currency has also been battered. Yesterday it was trading

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at 11.88 to the US Dollar. It's fallen around 45% in the last six

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months ` the worst of any currency in the world. David Stern reports

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from the Ukranian capital Kiev on the hopes and fears of local

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business. This underwear is multinational,

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produced by a local company, and is sold in Ukraine, Russia and the EU.

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Business will receive a boost when Ukraine signs a long anticipated

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free`trade deal with Europe. The owner says that European integration

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is Ukraine's only choice. But, he says that the road will be rocky,

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competition with European companies will increase. It is like learning

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to swim, everybody will dive into the water, but somebody will learn

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to swim, and some people won't. They will drown. The trade deal comes

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among political and economic turmoil. Ukraine's growth has

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plummeted, and the government owes billions of dollars to international

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investors. Last year, Ukraine's former president cancelled the EU

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deal. Hundreds of thousands protested the move, and drove him in

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power. Now, his successor is signing the deal. The revolution was not

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only pro` European, but also anti` Moscow and last year Russia said it

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would punish Ukraine economically if it signed the association agreement.

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The question is, does the threat still stand? Ukraine's relations

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with Russia had deteriorated drastically. Pro` Kremlin

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separatists are fighting in Ukraine's East. Russia and its

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economic allies can influence Ukraine in a number of ways. Russia

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and other Eurasian countries, especially given that they come from

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a third of our trade, there are a number of companies in the east of

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the Ukraine that exporter Russia. Many Ukrainians are hoping that once

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the deal is signed, that the benefits will outweigh the initial

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pain it will undoubtably bring. `` exports to Russia.

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Some good news from Japan in its battle to end deflation. It has seen

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consumer prices rise at their fastest rate in more than three

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decades. Let's go straight to Sharanjit Leyl in Singapore, who has

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been following the story. People typically around the world in some

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parts may say, oh my goodness, I don't want to see prices rise, but

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in Japan it is a relief? It is a huge sigh of relief, it is also a

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sign that Japanese Prime Minister `` the Japanese Prime Minister is

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making headway in the fight against deflation, and inflation is rising

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to 3.4%, that was in May, following an increase in nationwide sales.

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Deflation has been a huge problem for years. Falling prices for

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decades in Japan has held off making purchases. We have seen high utility

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charges squeezing budgets, household spending was down more than

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expected, about 8%. Analysts I have spoken to have said that raising the

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effects of the price rise, means that consumer prices would have been

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flat. That is a sign that not much has changed. It could also be a

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temporary blip and price gains could slow in coming months. As we have

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said before, this is important because Japan has battled deflation

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for the best part of the past two decades. That has hit domestic

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demand, stifling growth, and the government has taken steps to

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reverse the trend. The country 's central back Hill Central Bank has

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hit a target of 2%. The Japanese Prime Minister today in an interview

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declared an end to it. `` Japanese Prime Minister in an interview this

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week. If you are a regular viewer, you

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will know that every Friday we are trying to spot the next generation

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of global billionaires, who they might be, where they might come from

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and how they might make their money. Today we are in India, where the

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billionaire count is expected to double in the next ten years. Yogita

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Limaye has met two young entrepreneurs from the financial

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capital Mumbai who think they are already on the road to success.

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Young India is in the fast lane. This man is 27, and ever since he

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graduated five years ago, he has started one company every year.

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Among his ventures, this Harley`Davidson franchise. The only

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one in Mumbai. He has had the financial support of his family.

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But, he is aiming to make his own mark. He is in a hurry to achieve

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his goals, but is also realistic that sometimes not everything goes

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to plan. When the economy was better, I was aiming to be in the

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billionaire club at the age of 30, but that is going to push to 32

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now. I want to be the youngest billionaire in India. The other one

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was 31, so I am aiming for 30. That is going to be postponed but you

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never know! India has a large young population, and in Mumbai, they are

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among the first to be exposed to new technologies and ideas. It has an

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entrepreneurial spirit, that is a culture often employed early on.

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This man started up his first company when he was only 16,

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providing software solutions to local businessmen. I got my first

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company at the age of 15. It was something awesome. I discovered a

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new world. A new world could be Internet! `` called the Internet. I

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was researching how to make money on it rather than playing games. At the

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age of 19, he still has to graduate, but has already begun six ventures,

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some with his classmates from university. He believes that India

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is the place to be in right now. If you have a great idea, there is

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amazing potential. Because there are millions of people in India, it

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could happen faster than anyone has ever seen in New York, or anywhere.

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The conference to take on the world has come with India's rapid rise

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over the past decade. Even though growth has slowed over the past

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couple of years, people like these to believe that India still has most

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to go and they want to make sure that they are riding along as it

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tries to make its way towards economic success `` Miles to go.

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Good luck to them. In other news, Chinese e`commerce giant Alibaba has

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decided to list on the New York Stock Exchange in what could be the

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largest ever technology flotation. The decision is a blow to the rival

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Nasdaq market which was hoping to handle the share sale, expected

:10:20.:10:23.

later this summer. Alibaba handles more than 80% of online retail

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transactions in the world's number two economy. It could have a stock

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market valuation north of $200 billion. Wowzers! Argentina has

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moved closer to defaulting on its debt after a US judge refused to

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give it more time to pay off two hedge funds which hold 1.3 billion

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dollars in bonds. In debt. The judge has ordered Buenos Aires to pay both

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the funds by the June 30th deadline. Don't forget you can get in touch

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with me and some of the team on Twitter ` I'm @BBCAaron.

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Aaron will be back later, but another story here in the UK now.

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The head of counter terrorism in Wales says that police forces

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haven't failed in their efforts to combat the radicalisation of British

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Muslims. The denial comes after a video emerged showing two young

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Cardiff men encouraging others to join them in Syria and Iraq. More

:11:30.:11:32.

from our Wales Correspondent, Hywel

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