Lagarde told magazine Der Spiegel that efforts to stimulate domestic demand would result in economic benefits for both Germany and its European neighbors.
“If exports – which are the basis of the German economic model – decrease, the German government can counteract it,” she said.
Official data released on Wednesday showed that Europe’s biggest economy was trying to find its footing, with retail sales remaining flat in July.
Economic activity slowed almost to a halt in the second quarter of the year, and officials in Berlin have been counting on household spending to pick up some of the slack from exports, Germany’s traditional growth engine.
German officials expect economic activity to expand by around 3.0 percent this year.
But Lagarde warned there was a chance for another slide into recession, citing the worsening health of the global economy. She told Der Spiegel that countries must take action to prevent a downward spiral.