BRUSSELS (AFP) -- The European Commission lifted its 2007 growth estimate for the 13 nations sharing the euro to 2.6 percent from a February forecast of 2.4 percent on expectations of strong German performance.

The forecast means that the eurozone, long the laggard of major economic powers, would be the fastest growing economy in the developed world, with the U.S. growth estimated at 2.2 percent and Japan at 2.3 percent.

The European Union's executive arm estimated in its semiannual update of its official economic forecasts that the broader EU economy would grow even more quickly this year than in the eurozone.

It estimated that the 27-nation economy would expand 2.9 percent, raising its projection from a forecast of 2.7 percent in February.

Sharply stronger-than-expected growth in Germany boosted the overall outlook with Europe's biggest economy forecast to grow 2.5 percent this year, up from a previous forecast of 1.8 percent.

The Commission forecast that growth would ease only slightly to 2.5 percent in the eurozone and 2.7 percent in the EU.

"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 EU Economic and Monetary Affairs Commissioner Joaquin Almunia.

The broad-based economic recovery underway in Europe has helped drive down unemployment rates which have long been a major headache for European politicians.

The Commission predicted that the eurozone would see six million new jobs created between 2006 and 2008 and that the unemployment rate would fall from 7.3 percent this year to 6.9 percent in 2008.

The strong economic growth outlook was expected to ease the strain on government coffers in the euro Commission, which has the job of policing public finances in the EU, forecast that average public deficit levels would fall this year to 1.0 percent, with only Portugal over 3.0 percent with a deficit of 3.5 percent.

Meanwhile, eurozone inflation was forecast to fall to 1.9 percent in 2007 and 2008 from 2.2 percent in 2006, putting price growth spot on the European Central Bank's preferred level of less than but close to 2.0 percent.

The Commission said that growth could turn out even stronger than expected if falling unemployment levels lifted consumer confidence and in turn boosted broader domestic demand.

But it also warned that there were risks to the outlook, especially if a slowdown underway in the United States proved to be greater than expected and if oil prices spiked higher.