are partly backloaded. disadvantages, albeit globally low, are concentrated in relatively small groups, who are highly motivated to oppose them. this kind of opposition should be resisted and these arguments discarded. the bad argument has some intellectual merits. it states that in a situation of significant economic shock, structural reforms may have a negative effect on short - term demand. such a conclusion, implying that structural reforms should be postponed – and here again i refer to president draghi ’ s speech 4 – has nevertheless to be rejected. the reason for such a rejection is that the short - term impact of structural reforms does not simply depend on when they are implemented but how, the credibility of reforms and their interactions with other policy measures. and if structural reforms are well designed along such parameters, they can in fact have a largely neutral, if not positive, impact on short - term demand even in adverse cyclical conditions. 5 then, there is a line of argumentation stemming from the more general concern of increasing inequality in our economies. in the context of structural reforms, this issue has to be taken seriously. european citizens are sensitive to the problem of increased inequality. or, successful reforms require the acceptance of citizens and their conviction that such reforms will eventually increase per capita income without adverse inequality effects. structural reforms have therefore to be designed in such a way as to avoid increased inequality and, if needed, accompanied by budgetary redistributive measures. for example, and this is also relevant in the more general context of growth, it seems that there is scope in a lot of countries for tax reforms, which could be both efficiency and equality enhancing, whilst being revenue neutral. all this being said, structural reforms in the euro area are necessary and should be seen beyond the confines of national economies. this is important in order to enhance all possible mutually reinforcing effects and positive spillovers. further, it would also be helpful to strengthen coordination, minimize national discretion and think of the euro area as being one economy and not the simple addition of 19 economies. the implementation of measures should be enforced and national parliaments should be involved to ensure democratic accountability and local ownership. so far, i used the term “ structural reforms ”. however, the term “ structural policies ” might be a more appropriate and all - encompassing terminology. in that sense, let me very broadly mention how other policy areas or initiatives can through different channels contribute to enhance medium and long - term growth : first, innovation ; second, the transition to a

1. 7 % in 2016 and 1. 8 % in 2017. again compared with the projections in june, the outlook for real gdp growth has been revised downwards. this is due primarily to lower external demand owing to weaker growth in the emerging markets. the risks to this outlook are tilted to the downside, reflecting in particular the increased uncertainties related to the external environment. notably, current developments in emerging market economies have the potential to further affect global growth adversely via trade and confidence effects. before addressing the second part of my remarks, let me revert to the evolution of the output gap, i. e. the difference between actual and potential output. the negative output gap is expected to narrow gradually over the projection horizon, which is encouraging news. ecb staff macroeconomic projections for the euro area, september 2015. eurosystem staff macroeconomic projections for the euro area, june 2015. bis central bankers ’ speeches however, it is also necessary to stress that while the output gap is narrowing, it is occurring against a background of weak potential output growth, which is estimated to be around 1 % over the projection horizon. this is below its pre - crisis level. in noting this, we should, moreover, not overlook the fact that since the late 1990s the euro area experienced a steady decline of potential output growth : from about 2 % in 2000, it declined continuously to about 1. 5 % before the crisis. there is indeed a problem in long - term growth dynamics. this problem is not new but has deepened over time. with this in mind, let us consider very briefly fiscal and monetary policy before focusing later on structural reforms. starting with fiscal policy, it should support the economic recovery, particularly through growth - enhancing public investment, material and immaterial, while remaining fully compliant with the stability and growth pact. a full and consistent implementation of the pact is crucial to maintain confidence in the euro area ’ s framework. this, in turn, would have positive implications for future growth prospects, which should help ensure debt sustainability and be conductive to future fiscal space. with regard to monetary policy, which has to be focused on the primary objective of maintaining price stability over the medium term, its highly accommodative stance has contributed and continues to contribute to support economic activity and investment, narrow the negative output gap and foster economic growth. let us also bear in mind the important fact that price stability, as well as financial stability, is a conditio sine qua non