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The South Korean economy posted an on-year contraction of 4.3 percent in the first quarter of 2009, the worst performance in 11 years, amid the prolonged global downturn, the central bank said Friday.

According to the Bank of Korea (BOK), South Korea’s on-year growth rate in the country’s gross domestic product (GDP) for the final quarter of 2009 stood at negative 4.3 percent, continuing the previous quarter’s downward move of 3.4 percent annual decline.

The on-year economic contraction in the first quarter marked the worst since the fourth quarter of 1998 when the figure hit negative 6.0 percent, the BOK said.

Meanwhile, the on-quarter growth rate in the January-March period logged a 0.1 percent rise, compared with a sharp fall of 5.1 percent posted in the previous quarter.

Both annual and monthly growth rates for the first quarter stood below the BOK’s earlier forecasts, on-year fall of 4.2 percent and on-month growth of 0.2 percent, according to the BOK.

The data comes despite the government and the BOK have put efforts to pull the economy out of contraction by unveiling a series of economic stimulus packages, including a record 28.9 trillion-won (21.5 billion-U.S. dollar) extra budget, and cutting the key interest rate to the lowest in history.

“The Korean economy is still on a downturn trend although a sharp decline in economic activity eased considerably in the first quarter,” an official at the BOK said.

A senior Chinese diplomat said here Wednesday that China and the European Union (EU) should push forward mutually beneficial cooperation in all spheres by practicing pragmatism, keeping in mind the overall interest of the bilateral relations and working together to promote common interests between the two peoples.

“If we keep in mind the overall interest of our relations and work together to promote common interest between our peoples, we will be able to enjoy a closer partnership in the long run, and for next month to ensure the upcoming Sino-EU High-Level Dialogue and the summit great success,” said the Chinese Ambassador to the EU Song Zhe in a speech at a seminar on Sino-EU relations in Brussels.

Song said that since the establishment of Sino-EU diplomatic relations in 1975, there had been three outstanding changes in the relationship.

First, he said, the relationship has become more mature and stable in political sense. In recent years, the relations had a triple jump: from constructive partnership to comprehensive partnership and then to comprehensive strategic partnership.

Secondly, the relationship has become more productive and promotive for bilateral cooperation, with China-EU trade volume exceeding 425 billion U.S. dollars in 2008.

Thirdly, the relationship has become more pervasive and influential in international affairs, with the two sides forging a closer partnership dealing with international issues.

On the other hand, Song also singled out three constant factors that moor the relations on steady progress. “They maintain unchanged, and I believe they will not change in the future,” he said.

The first constant is both sides’ commitment to peace, the second one is the pursuit of common development, and the third one is the desire to strengthen friendship, he said.

“These changes and constants illustrate the dynamics, principles and trends of the China-EU relations. The changes bring impetus and progress, whereas the constants ensure stability and sustainability,” said the ambassador.

James Moran, Asia director at the Directorate-General for External Relations of the European Commission, said that a comprehensive strategic partnership does not mean both sides always thinking alike, and they should be able to keep their differences.

He described the current status of Sino-EU ties as “full engagement,” stressing that both sides are interdependent, and have shared values and interests in various areas. China and the EU have had effective cooperation in dealing with global challenges, such as the financial crisis, the fight against weapons proliferation and climate change, and both sides have agreed to fight protectionism, he added.

He highly praised China’s opening-up policy, describing its development as “a globalization success story.”

The EU official said that thanks to great efforts by both sides, the Sino-EU relations have bounced back from the setback at the end of last year culminated by the postponement of the summit.

Both Song and Moran expressed their hopes that the upcoming Sino-EU High-Level Dialogue and the Sino-EU Summit would push forward the steady development of bilateral ties.

Italy’s gross domestic product (GDP) fell 5.9 percent in the first quarter of this year compared to the same period last year, national statistics agency Istat said Friday.

This is the worst figure since 1980, Italy’s ANSA new agency reported.

According to Istat, the country’s GDP fell 2.4 percent over the previous quarter. If the current trend continues, Istat said, the GDP will fall 4.6 percent in 2009.

However, Italian Premier Silvio Berlusconi said the drop had been expected and the situation would gradually improve later this year.

“There is a crisis and the data released today was in line with what we expected. And although we are going through the worst crisis ever, the information we are getting from the business sector indicates that things are on the mend,” Berlusconi said.

The government’s latest forecast had predicted that GDP would tumble 4.2 percent in the first quarter. The 5.9 percent drop was the worst since the national statistics bureau began releasing the quarterly economic data in 1980.

The premier also said “the psychological aspect is the most important factor in a crisis and this is why it is our job to promote optimism and confidence.”

Brazil’s Central Bank President Henrique Meirelles said on Thursday the devaluation of the U.S. dollar is a global phenomenon instead of an occurrence restricted to Brazil.

“There is a global devaluation of the U.S. dollar. It has got nothing to do with the (Brazilian) real,” he said during a public audience in the Congress, reminding that the euro rose 2.7 percent compared to the dollar in the past two weeks, while the real rose 2.4 percent.

The U.S. currency was down 0.14 percent on Wednesday, with the exchange rate closing at 2.015 reais per dollar, the lowest since early October 2008. The devaluation caused the country’s exporters to worry that their products’ prices in the international market would fall.

Meirelles denied any intention to take measures to control the exchange rate.

“There is no success in the exchange control. The attempts at manipulation made by monetary authorities do not succeed,” he said.

Meirelles also said the recent decrease in Brazil’s annual basic interest rate Selic, which currently is at 10.25 percent, has nothing to do with the high inflow of dollars registered in the country.

He said the dollar inflow is a result of more foreign direct investments, more stocks investments, and the retake of credit.

An increase in China’s fiscal revenue in May indicates a recovery in the economy and leave the government more room to employ fiscal measures to boost it, Tuesday’s China Daily quoted experts.

The country’s fiscal revenue in May rose 4.8 percent year on year to 656.95 billion yuan (96.05 billion U.S. dollars), reversing the downward trend of the past few months, the Ministry of Finance (MOF) said yesterday.

Aggregate central and local government revenues in the first five months stood at 2.71 trillion yuan, down 6.7 per cent from a year earlier.

“The rise in May is a signal that the economy is recovering. Hopefully, starting from May, the national fiscal revenue would begin to show positive growth,” the newspaper quoted Jia Kang, president of the Institute of Fiscal Science, Ministry of Finance, as saying.

Another expert from the same institute attributed the reason of May’s rise to the launch of many projects included in the 4-trillion yuan stimulus plan.

“Though the stimulus plan was announced in November, many of projects were actually launched in spring, and is now starting to contribute to the economic growth,” said Zhao Quanhou, a senior researcher at the institute, told the newspaper.

Experts believe that May revenue increase gives much room for the treasury to use more fiscal measures to bolster the economy, but there still is huge pressure on the government to realize an 8per cent revenue growth in 2009.

“The key period is from June to October. We need to watch closely the figures in the coming months, and see if the economy is really starting to recover,” said Zhao.

China expects to see a 8 per cent fiscal revenue growth in 2009,much slower than previous years. Its revenue increased by 18.8 percent in 2008 and 32.4 per cent in 2007.

A senior Chinese leader has urged a severe crackdown on pornographic Internet content, stressing that there should be no slackening of efforts to punish the “vulgar trend” in the cyberworld.

Li Changchun, member of the Standing Committee of the Communist Party of China Central Committee Political Bureau, made the remarks during a five-day tour of the nation’s biggest city, Shanghai, that ended Friday.

He said the construction of “green” website-surfing venues should be stepped up to offer minors a healthy social and cultural environment.

While visiting the construction site of the Shanghai World Expo2010, Li said the expo should be a showcase of the nation’s cultural prosperity.

The expo would be another grand international festivity after the 2008 Beijing Olympics, Li said, noting that domestic and foreign journalists should be provided with favorable conditions in covering the event.

The official also stressed the importance of technical innovation and cultural reform while visiting local manufacturing companies and artistic troupes.

The World Food Program (WFP) on Tuesday lauded the G8 leader’s focus on food security and urged support for hunger needs of the world’s poorest.

In a statement issued as leaders at the G8 summit in L’Aquila gather to discuss global food security, WFP Executive Director Josette Sheeran called for a twin-track approach to food security, supporting long-term agricultural production with continued support for immediate hunger assistance.

“We applaud the G8 focus on food security,” Sheeran said in a statement issued on Tuesday. “We learned a lesson last year when rising food prices caused an epidemic of hunger leading to food riots in more than 30 countries. Without food people revolt, migrate or die. None of these are acceptable options.”

In figures released two weeks ago by the Food and Agriculture Organization, the number of hungry people is now projected to top 1.02 billion, and with the global economic crisis compounding the ongoing food price crisis in the developing world, causing loss of jobs, remittances and slowed exports and investment, this number is expected to climb further.

According to WFP, this reverses a four-decade trend where the number of hungry has declined. At the same time, global food aid supplies last year were at a 34-year low and 18 percent lower than that in 2005. Food aid has dropped by 35 percent since 1995.

“We cannot afford to lose a generation to malnutrition, starvation and despair,” said Sheeran. “Addressing immediate hunger needs is a critical long-term investment in healthy, stable societies.”

The agency depends entirely on voluntary donations, and has raised less than one quarter of its 6.4 billion million U.S. dollars budget for 2009 at the halfway point of the year.

“WFP is the safety net for the most vulnerable people in the world,” Sheeran said. “It’s a false logic for the world to say that we will either invest in tomorrow’s agriculture or today’s urgent food needs. There is no question that we must do both.”

A record number of Chinese businesses and manufacturers are participating in the annual exhibition of Chinese products in the United States, in a way to show their confidence in the U.S. market and American consumers, a senior Chinese official said here on Monday.

Inaugurating the “China Brand Show 2009″ in the Las Vegas International Convention Center, Vice Minister of Commerce Zhong Shan said the Chinese government pays much attention to the difficulties its economy is facing amid the global financial crisis.

“Ever since November last year, the Chinese foreign trade has been going down for a consecutive nine months, which complies with the world trade situation in general,” said the official.

Stressing that both China and the United States are each other’s essential trading partner, Zhong said that the two countries had committed to open more to trade and investment and fight protectionism at the recent China-U.S. Strategic and Economic Dialogue, held in Washington, D.C. in July.

On China’s domestic efforts to tackle the global economic recession, Zhong said the government has rolled out a huge economic stimulus package, and China’s stabilizing and promising economic trend has contributed to the global confidence in an early economic recovery.

“China’s GDP enjoyed a 7.1-percent growth in the first half of 2009, bringing the economic slump starting from the fourth quarter last year to an end,” said the vice minister.

According to organizers of the annual show, more than 200 enterprises from China are participating this year, to showcase their products during the three-day event that ends on Wednesday.

The show also serves as a promotion event for the 106th China Import and Exports Fair, to be held in Guangzhou from Oct. 12 to Nov. 4 this year, officials said.

The China Import and Export Fair, the country’s number one trade fair, has become a platform for enterprises from different countries to do business and one of the key channels for foreign companies to enter the Chinese market.

Iran’s Minister of Oil Gholam-Hossein Nozari said Monday that Iran will not lower its crude price, the official IRNA news agency reported.

Iran has not lowered its crude price and will not lower it, Nozari told the reporters when asked about the rumors around the country’s decision to lower its crude price.

“None of oil producing countries will lower their oil prices and the prices will be decided by the market variables and the supply and demand mechanism,” Nozari was quoted as saying.

He said that policy making and raising prices are among key goals of Iran’s Oil Ministry.

Earlier, Iran’s Oil Minister said that Iran would offer the Organization of Petroleum Exporting Countries (OPEC) new ways to boost oil prices.

The economy of Iran, OPEC’s second-largest producer, depends largely on oil. The income from oil accounts for almost 80 percent of the country’s foreign exchange revenues.

The weekly average prices of OPEC maintained their upward trend and finally broke through the 70-dollar mark, reaching 72.04 U.S. dollars a barrel last week, the Vienna-based cartel said Monday.

The price has doubled since the beginning of this year. It was also the highest of the OPEC weekly average oil prices since the second week of October 2008.

The global economic downturn hit the bottom in the first half of this year, and recovery can be expected at the year end while growth will be achieved throughout 2010, according to the main stream economics community.

Accordingly, both the International Monetary Fund and the Organization for Economic Cooperation and Development have revised up their growth forecast for the global economy in their latest reports.

The market is also showing signs of rebound, as some economic gauges of the major economies have taken turns for the better. Bolstered by sound fluidity, stock markets have risen, and commodity prices, such as those of crude oil and metal, have shot up.

Viewed only within the year 2010, the global economy without doubt has begun to bounce back and entered the right side of a V-shaped track. Recovery is the buzzword now, clearing the cloud that has been lingering for over a year since the outbreak of the financial crisis.

However, although a sense of optimism helps boost confidence, rationality and vigilance should prevail. A rebound does not necessarily bring sustained recovery, while the short-term momentum for recovery does not automatically translate into a medium-term upward trend.

The global economy still faces risks of a W-shaped recession, meaning it could hit another bottom before changing for the better. It remains to be answered whether global economic revival is on a sustainable track or is it just a new economic bubble taking the place of old one.

Since the outbreak of the financial crisis, the global economy has avoided a worse recession thanks to the prompt and effective monetary and fiscal stimulus measures taken by many governments. However, when the stimulus policies are due next year, they may not continue.

By then, the momentum for recovery depends on whether the already heavily indebted governments are capable of providing further stimulus and whether consumption and private-sector investment can provide enough momentum for the economy to respond positively.

Stimulus policies function as a cardiotonic, which is intended to help the heart function by itself, instead of replacing it. Likewise, it holds the key to sustained recovery whether internal impetus to growth can be inspired.

So far, the momentum for recovery is not coupled with a rise in employment. The jobless rate in both the United States and the euro zone were still close to 10 percent. Japan’s unemployment rate jumped to a six-year high of 5.4 percent in June.

Employment is a key factor that affects consumer confidence. A combination of high unemployment and sluggish consumption will form a vicious cycle that could lead to risks of a new economic downturn.

For the moment, the global economy is a mixed picture. Some of the economic indexes are turning for the better, while unemployment is still serious. Some of the large financial institutions have struggled out of the red, but banks’ toxic assets have not been resolved.

On the one hand, the stock market, the housing market and commodity prices have risen considerably. On the other, the real sector is not faring well. The interest rates have seen a bottom low while income did not grow correspondingly.

One of the lessons that should be learnt from the financial storm is that it may not be a good thing for companies or nations to make an excessive pursuit of profit or growth. If the growth is not established on a sustainable basis, it will subsequently lead to bubbles and increased risks.

If recovery is only seen in terms of GDP instead of being a result of dealing with the unanswered calls, it could turn out to be a new round of growing bubble.