The European economy received some good news Monday with new forecasts predicting it would grow twice as fast as expected this year. Behind the new figures is continued growth in Germany.
The 27-nation EU was hit hard by the financial crisis
Confidence in the European economy received a shot in the arm Monday with renewed growth estimates showing the euro zone economy is likely to grow twice as fast as previously thought.
The European Commission said in its biannual interim economics forecast for the EU that the 16-member euro zone would grow by around 1.7 percent this year, up from the 0.9 percent growth forecast made in May.
At the heart of the new figures has been snowballing financial confidence in Germany, Europe's largest economy.
The commission almost tripled its forecast for German gross domestic product growth to 3.4 percent from 1.2 percent for 2010. It also raised predictions for France, Italy and the Netherlands.
The commission figures roughly match up with those of the European Central Bank, which said on September 2 it expected euro zone growth to be between 1.4 and 1.7 percent in 2010.
Economic and Monetary Affairs Commissioner Olli Rehn said in a statement that "the rebound of domestic demand bodes well for the job market."
"However, uncertainties remain and safeguarding financial stability and continuing fiscal consolidation remain key priorities," Rehn said.
The commission also forecast third- and fourth-quarter euro zone growth of 0.5 percent and 0.3 percent quarter-on-quarter respectively.
"The contribution of private investment and consumption to GDP growth in the second quarter of 2010 exceeded the combined contributions of inventories and net exports," the commission said in a statement.
Author: Darren Mara (Reuters/dpa)
Editor: Andreas Illmer