By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-Christine Lagarde, Managing Director (MD) of the International Monetary Fund (IMF) Thursday said that the euro area is beginning to record economic growth; though more needs to be done.

Lagarde made this disclosure in her speech “The Interconnected Global Economy: Challenges and Opportunities for the United States—and the World” at the US Chamber of Commerce in Washington, DC.

The IMF Boss on the current state of the global economy said advanced economies are in a better place than they were six (6) months ago. “For the first time in a long time, the Euro Area is also beginning to grow, although there is still much to be done,” she said.

Also, she said while Japan’s reform efforts are ongoing, he country is also doing better thanks to aggressive policy support.

According to Lagarde, emerging market countries are the other side of the story. “In large part, they helped keep the global economy afloat during the crisis. Now, while still dynamic, their momentum is slowing,” she said.

Lagarde affirmed that for some, this may be a shift toward more balanced and sustainable growth; while for others, it reflects the need to address imbalances that have made them more vulnerable to the recent market turbulence.

She further affirmed that going to the G-20 Summit in St. Petersburg, some countries were anticipating a strong difference of views between the advanced and emerging economies about the gradual withdrawal—or ‘tapering’—of unconventional monetary policy in the U.S. and its potential spillover effects for other nations.

“Instead, countries had constructive discussions. G20 members recognized the need to ensure that exit from this exceptional monetary support, when it comes, should be orderly and clearly communicated. There was also a clear recognition that the emerging market economies, for their part, need to address their domestic challenges to manage any spillovers effectively” she said.

“We all talk about global interconnections and spillovers. I certainly came to appreciate this as Trade Secretary for France. What has struck me most since coming to the IMF is their size and significance,” Lagarde said.

According to her, some examples since 1980, is that volume of world trade has increased fivefold and trade has grown in importance for global production.

Lagarde said world exports relative to output grew from 20 percent (20%) in 1995 to 30% in 2008, before falling during the Great Recession, and recovering somewhat since.

The IMF Chief said there has also been the rapid acceleration of financial integration. By the time of the crisis, global capital flows were more than triple their level in 1995.

She said IMF’s recent ‘spillover’ analysis—how what happens in one country affects others—reinforces the importance of this interconnectedness. “It suggests, for example, that if the world’s five major economies were to work together to adopt a more rigorous, comprehensive and compatible set of policies, it would increase global GDP by about 3% over the longer run.

“We all have a large stake in these interconnections. 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. The converse is also true. What happens here matters increasingly for the global economy,” she said.