The European Commission lifted its 2006 euro zone growth estimate to 2.5% today from 2.1% previously, predicting the 12-nation bloc would see the strongest growth since 2000.
The estimate signals a sharp upturn from last year when the euro zone economy, currently benefiting from firm domestic demand, grew by 1.4%.
It follows an estimate from the Organisation for Economic Cooperation and Development yesterday sharply upgrading estimated euro zone growth this year to 2.7% from 2.2% forecast in May.
The commission said that Germany in particular was expected to grow faster than expected, with the biggest economy in Europe now set to expand by 2.2% this year. This is up from an estimate of 1.7% in the commission's last EU forecasts dating from May.
The commission also revised French growth sharply higher, estimating now that the second-biggest economy in the euro zone would grow 2.3% this year instead of the 1.9% previously expected.
The European Union's executive arm also predicted that the combined economies of the 25-nation EU would grow even faster than the euro zone, reaching growth this year of 2.7%, up from a previous forecast of 2.3%.
Outside the euro zone, the commission forecast that the UK economy would grow 2.7% instead of a previously expected 2.4% while the Polish economy would chalk up growth of 5% instead 4.5%.
The commission said that given the stronger-than-expected growth this year it might raise the outlook for next year as well when it publishes complete EU forecasts in November.
The commission also forecast that the euro zone would see annual inflation this year of 2.3%, slightly higher than its previous forecast of 2.2%. The European Central Bank strives to keep euro zone inflation at a rate less than but close to 2%, although high oil prices have largely kept that target from been met.
