The euro-zone economy is set to continue a robust growth this year, the European Commission said on Friday, raising its previous growth forecast for the bloc to 2. 4 percent.

The EU executive arm also updated its forecast for the economic growth in the European Union this year, estimated at 2.7 percent. Both figures for the euro zone and the EU are 0.3 percentage point above the forecasts made by the Commission last autumn.

"The European economy has done remarkably well in 2006 and is set to continue to grow briskly in 2007," said Joaquin Almunia, EU Economic and Monetary Affairs Commissioner. "This is not only due to the favorable cyclical conditions. It also reflects an increased resilience of the European economy and shows that the economic reforms already carried out were worth the effort."

Despite high energy prices which reached record levels last summer and a slowdown in the United States, the European economy was well on track of strong recovery in 2006, mainly driven by domestic demand thanks to an improved labor market situation.

About 3 million jobs were created in the EU countries last year, of which 2 million in the euro area, according to the Commission.

Meanwhile, inflation was under control. Higher oil prices kept consumer price inflation at 2.2 percent in 2006 for both the euro zone and the EU, unchanged from 2005. But core inflation remained steady at around 1.5 percent.

The economic growth is set to continue at a relatively brisk pace into 2007, though moderating a little bit, the Commission said, adding the inflation is expected to fall to 1.8 percent in the euro zone and 2.0 percent in the EU.

But certain risks are always ahead. The Commission said an acceleration of wages unrelated to expected increases in productivity could choke off the economic expansion by inducing a faster-than-expected monetary policy tightening. Uncertainty also remains high regarding the impact of the value-added tax increase in Germany, which may slow the pace of the EU biggest economy.

On the external side, the issue of global imbalances and the associated risk of their disorderly unwinding remains a concern, the Commission said.

Source: Xinhua