The European Commission Monday revised upword its economic growth forecast to 2.9 percent in 2007 and 2.7 percent next year as the prospects are looking brighter than six months ago.

"Despite high oil prices and a slowdown of the U.S. economy, growth is expected to remain buoyant, both in the euro area and the European Union as a whole," the commission said.

Finance ministers from the 27-nation bloc are expected to discuss the economic situation and outlook on the basis of the commission's forecasts later Monday.

The commission said that for the euro area, growth prediction is 2.6 percent for 2007, 0.5 of a percentage point higher than the autumn forecast.

"The European Union and the euro area remain on a brisk growth path that should reduce the unemployment rate and the average public deficit further to levels not seen in a long time," said Joaquin Almunia, the EU economic and monetary affairs commissioner.

The economy is expected to generate employment growth of around1.25 percent on average in 2007-2008 in both the EU and the euro area.

The commission said that almost nine million jobs will be created during 2006-2008 and six million alone in the euro area.

The unemployment rate is expected to fall to 6.7 percent in the whole of the EU and 6.9 percent in the euro area in 2008, the commission predicted.

"We must help sustain the economic recovery by putting public finances firmly on a sounder footing and by pursuing the reform process. This, in turn, will cut public debts and help increase the growth potential before the ageing problem starts kicking in," Almunia said.

The commission explained that the stronger outlook is explained by several factors, ranging from better-than-expected growth in 2006 to a stronger underlying momentum of domestic demand, including private consumption and investment.

For next year, economic growth will slow down slightly. However, it is still expected to stay well above 2.7 percent in the EU as a whole and 2.5 percent in the euro area, according to the commission.