The euro zone economy has been forecasted to grow twice as fast in 2010 than previously predicted due to it being on a more solid footing, according to the European Commission.

In its twice-yearly interim economic forecasts for the 27-nation EU and the 16 countries using the single currency, the EU executive said it now expected the euro zone to grow by 1.7% this year, rather than the 0.9% it forecast in May and up from a 4.1% contraction in 2009.

Olli Rehn, Economic and Monetary Affairs Commissioner, said: "We now have solid ground under our feet. We have started scoring again, but there is no reason to shout for victory. We must remain alert and vigilant."

The Commission’s forecast compares favourably with projections by the European Central Bank which stated on September 2nd that it expected euro zone growth to be between 1.4 and 1.7% this year.

Rehn said: "The European economy is clearly on a path of recovery, more strongly than forecast in the spring, and 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."

The Commission said risks to its forecasts were broadly balanced. Among the negative risks, it saw high debt levels and lingering tensions in sovereign debt markets.

On the positive side, it listed the impact from fast German growth into other EU countries and stronger domestic demand.