##erabilities. political winds are becoming tailwinds. there is newfound confidence in the reform process, and newfound support for european cohesion, which could help unleash pentup demand and investment, if confirmed by decisive action. still, the implementation of structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost productivity growth. regarding fiscal policies, all countries would benefit from intensifying efforts towards achieving a more growthfriendly composition of public finances. a full, transparent and consistent implementation of the stability and growth pact and of the macroeconomic imbalances procedure over time and across countries remains essential to bolster the resilience of the euro area economy. 2 / 2 bis central bankers'speeches

yves mersch : the european central bank's monetary policy stance speech by mr yves mersch, member of the executive board of the european central bank, at an mni connect event, singapore, 25 july 2017. * * * the global recovery is firming and broadening. and the ongoing economic expansion in the euro area provides confidence. but while inflation will gradually head to levels in line with our definition of price stability in the midterm, it has yet to translate into stronger inflation dynamics. headline inflation is dampened by the weakness in energy prices. moreover, measures of underlying inflation remain overall at subdued levels. therefore, as i pointed out yesterday in my oral presentation at the bank negara malaysia monetary policy conference, a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to gradually build up and support headline inflation developments in the medium term. let me provide you with some details of the ongoing recovery. euro area real gdp increased by 0. 6 %, quarter on quarter, in the first quarter of 2017, after 0. 5 % in the last quarter of 2016. incoming data, notably survey results, continue to point to solid, broad - based growth in the period ahead. the pass - through of our monetary policy measures is supporting domestic demand and has facilitated the deleveraging process. the recovery in investment continues to benefit from very favourable financing conditions and improvements in corporate profitability. private consumption is supported by employment gains, which are also benefiting from past labour market reforms, and by increasing household wealth. moreover, the global recovery should increasingly lend support to trade and euro area exports. however, economic growth prospects continue to be dampened by a slow pace of implementation of structural reforms, particularly in product markets, and by remaining balance sheet adjustment needs in a number of sectors, notwithstanding ongoing improvements. the risks surrounding the euro area growth outlook might be upward in the short term, but are overall broadly balanced. on the one hand, the current positive cyclical momentum increases the chances of a stronger than expected economic upswing. on the other hand, downside risks primarily relating to global factors continue to exist. the thread of deflation is gone and reflationary forces are at play. prices pressures in the early stages of the pricing chain remain strong but have still not transmitted to the later stages. euro area annual hicp inflation was 1. 3 % in june, down slightly from 1. 4 % in may, mainly due to lower energy price inflation. looking ahead