14/08/2014 World Business Report

News. Now for the latest financial news with Sally and World Business

Report. Economic growth in the eurozone is

expected to be bad and worst of the bunch will be the former star,

Germany. What went wrong? A Russian gas giant Gazprom reports

its results. How will the growing political row with Russia affect

energy supplies in Europe this winter?

Welcome to World Business Report. I'm Sally Bundock. Also, we look at

the PC maker that has posted a 23% jump in profits in the last quarter,

despite the fact that we are all using our mobile devices as opposed

to the PC on the desktop. First, let's look at the latest growth

numbers for the EU, France and Germany, that are out today.

France's latest figure is expected to be just positive at 0.1%,

compared with zero in the first quarter. The ZEW business confidence

measure in Germany, on Tuesday, was at an 18 month low and expectations

today are for the second quarter GDP to be zero. After leading the

currency bloc out of its longest`ever recession last year,

Europe's largest economy has been hit by the downturn elsewhere in the

region and industrialists are gloomy about the impact of the trade row

with Russia. Joining me now from Berlin is Doctor Tim Gemkow, senior

economist at DIHK. Thank you for being on the programme. How

pessimistic AU? `` are you? We do see a decrease in the vibrancy of

the German economy but we should not overestimate the figures because we

had a very mild winter, so a lot of construction continued through the

winter, so the figures show a counter movement to the increase in

the first quarter. But, as you pointed out, especially due to

concerns over exports, because of the geopolitical crisis, especially

in Russia and the Ukraine, we also see a slowdown compared to what was

possible at the beginning of the year. Germany is an economy that

relies heavily on its exports. There is the issue with Russia but there's

also the issue of the strong euro hitting German exporters. When do

you think things will improve for Germany? Well, it is actually a very

complicated situation because the current climate of sanctions and

Russian counter sanctions not only keeps Germany directly but also

partners in the eurozone, which again are important destination for

German exports. On the other hand, when you look at the world at large,

the good thing is that German exports, `` are less price

sensitive. Because Germany occupies many specialised niches. So it has a

smaller effect of German exports than those from other European

countries. What does the German economy need? As you say it is

complicated, you are within the eurozone so you have a European

Central Bank that has to think of many other countries when it set its

interest rate policy, etc, so what does the German economy need to move

from zero growth to something more impressive? We actually need

measures on three levels. Of course the most important is that diplomacy

manages to find a way to resolve the current crisis with Russia, without

further `` escalation. We also need more pickup of growth in the

eurozone, which depends on the reform activities include free

countries. We also need a policy in Germany that focuses more on

competitiveness. `` in Rectory countries. We have seen this

becoming less of a concern in the past few years in Germany because at

the moment we are in a good position. Well you can't rest on

your laurels. Thank you very much. Needless to say, when we get the

numbers from fines, Germany, the eurozone, we will update you. ``

from France. They talk about another company, Gazprom. `` let's talk. It

will release its half yearly results. This company is tightly

bound up in international dispute between Russia and Ukraine. Gazprom

has already cut off gas supplies to Ukraine in a row over payment, as

winter approaches there are fears that its supplies to the rest of

Europe will also be affected. Jeremy Howell reports.

Last June Gazprom cut off gas supplies to Ukraine because of

unpaid bills. Ukraine has been surviving on its reserves. But now

the gas stocks are running low and call the weather is on the way.

Unless it can agree a new price for gas supplies with Gazprom soon, the

new energy crisis looms. They don't have an agreement with Ukrainians

about the cost of gas for Ukraine, so there's `` the danger that

Ukraine may simply extract gas from that transit pipeline and use it for

its own purposes and therefore depriving the European consumer of

its gas from Gazprom. The last time this happened was in 2009, when

Gazprom shut off gas supplies to Ukraine and it in turn siphoned off

gas passing through the countries to east and central Europe. People

there had to chop wood for fuel. Gazprom came the focus for public

hatred. It will be keen to not have its business in Europe damaged

further. Gazprom's chief executive must now try to persuade the Kremlin

to less `` to negotiate a new deal with Ukraine. What will the Kremlin

lesson? Gazprom will be pushing for a deal, that they can continue to

supply gas to Europe and Ukraine, which remains quite a large market.

As the debate rages, Putin will have to choose sides. At the decision

which he hasn't had to make much during his ten year `` tenure at the

top of the political elite. It is a tough decision for him to face.

Analysts say events could play out in two ways. Kremlin could strike a

new gas deal with Ukraine and solve Gazprom's problems or it might, for

political reasons, hold of, building up is in Ukraine `` building up he

is in Ukraine and Europe of a gas shortage.

The world's largest PC maker, Lenovo, has reported a 23% jump in

profits in the last quarter. Rico Hizon is in our Asia Business Hub in

Singapore. Tell us why it is doing so well. They've done it basically

with a 2`way strategy. It has maintained its grip in the PC market

by remaining the leader in China. At the same time, it has increased

sales from Europe, the Middle East, Asia, Africa and the Americas. And

it has been successful with its smartphone and tablet models. Sales

not only sword but also worldwide `` on the mainland but also worldwide.

Global laptop shipments fell by 3.7%. In smart phones, over the past

year, it replaced Samsung to become the growing number one smartphone

seller in China. Lenovo has been successful in widening its global

footprint by making some major acquisitions. This year alone it

made $5 billion worth of acquisitions. They struck agreements

to acquire IBM's server unit and handset unit from Google. This will

indeed contribute to the topic `` profitability of the company going

forward. We will keep close eye on it. Thank you. Let's talk about

South Korea. Its central bank has cut interest rates for the first

time in 15 months. The move was expected by analysts. The Bank of

Korea lowered its key rate to 2.25% to try stimulate more spending in

the economy. US network equipment`maker Cisco

Systems says it plans to cut 6,000 jobs, or about 8% of its workforce.

The company has been facing slowing sales in emerging markets as phone

companies stop buying new hardware like routers and switches. However,

shares rose nearly 2% in late US trading after Cisco reported better

than expected quarterly earnings. These are the financial markets. The

South Korea story has stocks edging higher. Japan is up by .7%. Hong

Kong fairly flat. Let's show you the currencies:

GP surgeries in England found to be failing could be put into special

measures and closed down if they don't approve, under new proposals

announced today. It's part of a new system of inspections for surgeries

which officially begins later this year. Every practice will be given a

rating on the quality of care it provides to patients, as Branwen

Jeffreys