Europe may be home to the epicenter the global financial crisis but other economies across the world have problems of their own that need tackling, says Christine Lagarde, managing director of the International Monetary Fund.
"The eurozone is not the only one that needs to face the resolve to address its difficulties. Other places in the world need to also face difficulties. The United States, for instance, has to look at its deficit forecast, it has to change its debt trajectory and has to end this very sterile debate about debt ceiling that produced no significant and longstanding outcome," Lagarde tells CNBC.
"Japan has to introduce structural reforms and has to identify a path for yet again for different debt trajectory and market economies that have a surplus, particularly in the emerging world, also have to continue the type of policies that they have embraced, which has to do with shifting back to internal consumption a bit more."
Big emerging market economies often boom via robust exports during the good times, but when larger economies like China slow, they import less from those emerging-market economies, exacerbating downturns.
Europe needs more
European governments have agreed to better coordinate fiscal policies in order to prevent a repeat of the current debt crisis and have also agreed on rules to shore up the continent's banking sector.
While most of Europe operates under one currency and one central bank, governments up to now have been largely free to borrow and spend on their own accords, which helped spark the current crisis.
The European Central Bank, meanwhile, has made cheap credit available to banks with the aim of alleviating tight credit conditions in Europe, and the IMF is currently looking to boost its lending capacity by $500 billion to assist troubled eurozone economies.
More work remains.
"From the IMF point of view, we believe there should be more growth, a stronger firewall and deeper integration," Lagarde says.
European nations have agreed to earmark about $150 billion to increase the IMF's lending arsenal, and the fund will ask other member nations to contribute to get to $500 billion.
"We assess the financing needs around the world and not just in the eurozone at about $1 trillion, and as the IMF has to participate in building the firewall for all its members, not just the eurozone itself, we need additional lending capacity in the range of $500 billion."
"Some of it has already been earmarked by the euro partners, who have committed $150 billion and the IMF, being a multilateral institution, is going to ask its membership to contribute to that additional lending capacity."
Emerging market economies, historically on the borrowing end of IMF negotiations, have been asked to contribute to that additional lending capacity.
"The membership at large is very supportive of the IMF playing the role that it has been assigned to play, that is, helping with the stability of the global economy," Lagarde says.
Still, Europe must make progress above all else.
"I have received, indeed, very positive feedback from the membership at large, but generally it has been predicated on the effort that members of the eurozone have to make, whether it's the fiscal compact and its delivery, whether it's improved competitiveness, whether it's increased firewall, deeper integration — all of it on the comprehensive basis so that the euro partners demonstrate themselves that they have faith in their collective future."
While the U.S. remains vulnerable to a European meltdown, the economy will likely avoid recession in 2012, a USA Today poll of economists shows.
Growth will be weak, however.
The economy will grow 2.2 percent in the first half of 2012 after expanding 3.1 percent in fourth-quarter of last year, according to the median forecast of the 48 economists surveyed, as increased optimism stemming from December holiday shopping and Japan's recovery from the 2011 earthquake fades.
"The little improvement we saw was partly catch-up; the retail recovery at Christmas was more hype than reality," says Diane Swonk, chief economist at Mesirow Financial, USA Today adds.
"Consumer confidence is still at recession levels, just not at depression levels."
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