Brussels  - More jobs will be lost in Europe before the economy recovers, the European Commission said Monday as it published forecasts pointing to a contraction in gross domestic product of 4 per cent in 2009.

"The situation has improved ... but the weak economy will continue to take its toll on jobs and public finances," said Joaquin Almunia, the European Union's economic and monetary affairs commissioner, as he presented updated forecasts for the current year.

The European Commission's latest forecasts point to marked improvements in the EU's largest economies in the second half of the year. But the overall GDP figure of -4 per cent is unchanged on its spring forecast because the start of the year was worse than expected.

The economy of Europe's locomotive, Germany, is now expected to grow by 0.7 per cent in the third quarter and by 0.1 per cent in the final three months of the year. This results in a revised overall forecast of -5.1 per cent, compared with previous forecasts of -5.4 per cent.

France, Italy and Britain are also seen posting positive growth rates in the second half of 2009, while Spain's recession is set to extend into the new year.

"The global economy is no longer in freefall" and recent economic figures are "encouraging", the commission said.

But while there are reasons to be "moderately optimistic", Almunia said EU governments need to "continue implementing the recovery measures announced for this year and 2010."

The EU's unemployment rate rose to a four-year high of 9.0 per cent over the summer, but officials in Brussels expect it to hit at least 9.4 per cent by the end of the year. (dpa)