Strong U.S. Economy, Strong Global Economy—Two Sides of Same Coin

Signs of global economic recovery, but growth remains subdued

U.S. recovery taking hold, private sector leading the way

Job creation key ingredient of domestic and global economic recovery

“What happens elsewhere in the world—be it the success of recovery in Europe or the continued smooth functioning of supply chains in Asia—matters increasingly for the United States,” Lagarde said. “The converse is also true. What happens here matters increasingly for the global economy.”

Her remarks, which focused on the interplay between the global economy and the U.S. economy, also highlighted the need to find joint solutions to secure a lasting, balanced and widely shared global recovery.

“Job creation is a critical ingredient of any economic recovery, domestic or global,” she emphasized. Businesses have a key role to play, Lagarde said, but at the same time, policymakers have an important responsibility to help “shape the environment in which businesses and citizens can thrive—and jobs can be created.”

Changing global picture

Lagarde said that global growth remains subdued, while acknowledging that the global economic environment is changing. She emphasized that economies are moving at different speeds and that the fruits of growth are not evenly shared, both in the United States and other countries.

The U.S. economy is growing and, after a long time, so is the Euro Area. In Japan, aggressive policy support and the ongoing reform process is helping to spur growth. The emerging market economies, on the other hand, are slowing. “For some, this may be a shift toward more balanced and sustainable growth,” Lagarde told the audience. “For others, it reflects the need to address imbalances that have made them more vulnerable to the recent market turbulence.”

Reinforcing the point about global interconnections, Lagarde cited the IMF’s recent “spillover” analysis, which suggests that if the world’s five major economies were to work together to adopt a more rigorous, comprehensive, and compatible set of policies, it could boost global GDP by about 3 percent over the longer run.

U.S. recovery gaining strength

Lagarde noted that the U.S. economy is gaining strength, calling this good news for America—and good news for the world economy. Although growth is still modest—well under 2 percent—it should accelerate by a full percentage point next year, Lagarde said, adding that the private sector is playing a key role as the engine of growth and job creation.

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