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September 26, 2011 at 06:23 AM
Mohamed El-Erian, CEO and co-CIO of PIMCO, said that Europe is headed for recession next year and the region’s economy will shrink by 1-2%. The U.S., he added, will stagnate. He also said that volatility will persist because the right actions have not been taken by policymakers either in Europe or in the U.S.
Bloomberg cited El-Erian’s comments during a Sept. 24 interview in Washington as the PIMCO chief said, “For the next 12 months, the global economy will slow materially with advanced economies struggling to grow much above zero. Emerging economies will maintain faster growth, albeit not as high as the last 12 months.”
El-Erian spoke as world leaders gathered in Washington over the weekend for annual meetings of the International Monetary Fund (IMF) and the World Bank. The atmosphere at both meetings was decidedly negative as attendees grappled with the debt situation threatening to overflow from Greece to engulf the rest of the euro zone. Billionaire investor George Soros commented in the report that Greece may not be able to avoid defaulting on its debt; therefore, “something needs to be done” to protect European banks.
