The eurozone is emerging from recession, according to the latest forecast from the European Commission.“The economy appears to be at a turning point,” the commission said.
But because the economy contracted by more than expected in the first half, the overall annual forecast has remained unchanged at -4%.
Separately, official figures showed that eurozone industrial production fell by 0.3% in July compared with the previous month.
The commission said the improved economic outlook was due to “unprecedented” government stimulus that had helped to boost overall economic activity.
These stimulus packages should be kept in place throughout next year to ensure recovery, said European Union Monetary Affairs Commissioner Joaquin Almunia.
‘Gradual recovery’
Earlier this month, the European Central Bank (ECB) also raised its forecast for economic growth.
The ECB said the eurozone economy would contract between -4.4% and -3.8% this year.
The head of the bank said the eurozone economy was entering a period of “stabilisation and gradual recovery”.
The eurozone’s two biggest economies, Germany and France, have already emerged from recession.
Many analysts expect the eurozone economy to follow when growth figures are released for the July to September quarter.
But the industrial output figures highlighted the fragile nature of any recovery.
There are fears that a recovery could stall when government stimulus packages come to an end.
Commenting on the commission’s forecast, HSBC analyst Janet Henry said: "This is a turning point in the global cycle. I think we will see GDP start to turn positive in the third quarter.
“But I think there is still some doubt about how much is driven by temporary stimulus and how sustainable the recovery will be.”