Both the European Union (EU) and the euro zone will see stronger growth this year than previously estimated, but risks from the financial market still remain, according to the spring economic forecast of the European Commission released on Wednesday.

The EU will see its economy grow by 1 percent in 2010, while the euro zone will grow by 0.9 percent after experiencing the deepest recession in its history, the European Commission said.

Forecasts made last autumn by the commission put the growth rates for both blocs at 0.7 percent in 2010.

In 2011, the EU economy is set to gather pace, growing by 1.75 percent, while the euro zone will be up 1.5 percent.

The continued growth can be mainly achieved through stronger external environment, while weak domestic demand may continue restrain the recovery further out, the forecast said.

According to the EU's forecast, Greece, which is set to receive a 110-billion-euro (146-billion-U.S. dollar) bailout package, expects a decline of 3 percent in gross domestic product (GDP) this year and a 0.5 percent drop in 2011 under present policies -- the only country in the EU without growth next year.

Meanwhile, Germany and France, the euro zone's largest economies, are expected to perform better than average in the comings years.

Compared with other major economies, the EU still lags far behind in the coming two years.

The forecast suggested that the U.S. economy will grow by 2.8 percent in 2010 and by 2.5 percent in 2011, while the Japanese economy is estimated to expand by 2.1 percent in 2010 and 1.5 percent in 2011.

China, meanwhile, is forecast to achieve a 10.3-percent growth in 2010 and a 9.4-percent growth in the year after.

Despite the better than expected growth, the EU's public finances will remain under pressure in the short term.

The public deficit of the EU will surge to 7.25 percent of GDP, and will only improve slightly in 2011 to around 6.5 percent. Moreover, the public debt ratio is to reach 79.6 percent for the EU and 84.7 percent for the euro zone this year, with 83.8 percent and 88.5 percent respectively next year -- all far above the 60 percent ceiling set by the EU Stability and Growth Pact.

Greece's public deficit is projected to reach 9.3 percent in 2010, while that of Spain will shoot up to 9.8 percent and that of Portugal to 8.5 percent this year, all far beyond the 3 percent EU ceiling.

Forecast of the public debt of Greece will be as high as 124.9 percent of its GDP in 2010 and stand at 133.9 percent next year, while the figures for Spain and Portugal are estimated to be 64.9 percent and 85.8 percent -- also beyond the 60-percent ceiling of EU though better than Greece.

"The EU recovery continues to be surrounded by high uncertainty, illustrated by the recent tensions in sovereign-bond market," the European Commission said.

"As the economy is emerging from a recession accompanied by a financial crisis, the recovery crucially relies on the soundness of financial markets, which has yet to be solidly re-established," it added.

European Commissioner for Economic and Monetary Affairs Olli Rehn stressed at a press conference on Wednesday that the EU "must ensure that growth will not be derailed by risks related to financial stability."

The European Commission published two major economic forecasts in spring and autumn each year, with two other interim forecasts in February and September for the seven largest EU economies.