The economic turmoil battering Greece will get worse before it gets better and will infect a lot more than just the region’s banking system, according to Mohamed El-Erian, chief economic advisor at Allianz SE, who predicts poverty in the region will spike.
“The unemployment rate already at 26% is going to go higher as will youth unemployment at about 50%.” Said El-Erian during an appearance on FOX Business Network’s Mornings with Maria.
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El-Erian, who says there is an 85% chance Greece will leave the European Union, also predicts the country’s politicians will lose most of their clout, if they haven’t already.
“There is a chance the politicians may no longer be able to control the destiny of the country, the economic destiny.”
The global stock markets were jolted downward Monday after Greek Prime Minister Alexis Tsipras failed to accept the terms of a bailout agreement with Eurozone leaders. Instead, saying he will take the offer to the Greek people in a referendum on July 5.
Even with the global tumult hitting stocks, El-Erian remains bullish on the United States, adding, “The U.S. can still outperform the rest of the world.”
The S&P 500, Dow Jones Industrial Average and the Nasdaq Composite were all down over 1% in mid-day U.S. trading.