UPDATE 1-Europe unlikely to become new Lehman – IMF

* Europe unlikely to cause Lehman-type credit crisis

* World leaders learned from Lehman crisis, tested actions

* LatAm to suffer only mild impact as risk aversion rises
(Recasts; adds quotes from IMF director, market reaction)

By Walter Brandimarte

NEW YORK, May 20 (BestGrowthStock) – Europe’s debt problems are
unlikely to snowball into a global credit crisis similar to the
one that followed the collapse of Lehman Brothers in 2008, a
director with the International Monetary Fund said on
Thursday.

Nicolas Eyzaguirre, head of the fund’s Western Hemisphere
Department, added that Latin America will suffer only a “mild”
impact from the euro zone crisis as risk aversion rises
globally.

“We’re going to face some instability because this is not a
quick fix, but it’s not like the post-Lehman because … the
ability of the world community to agree on measures to
stabilize (markets) is there,” Eyzaguirre told reporters in an
event organized by Itau Securities in New York.

His comments provided some relief to Latin American markets
hit by worries Europe’s debt crisis would crimp world economic
growth. The Chilean peso erased early losses after he spoke,
traders said. For details, see [ID:nN20127353].

Eyzaguirre’s reassurances follow a warning from European
Union economy chief Olli Rehn earlier this month the insolvency
of Greece could paralyse the world’s financial system, just as
the Lehman collapse did.

Eyzaguirre argued that world leaders have learned how
markets depend on each other, which means a freeze of
international credit lines similar to what occurred in late
2007 is “highly unlikely” now.

Europe’s economy will suffer the effects of the debt crisis
for many years, however, as a combination of high debt levels,
low competitiveness and government spending cuts will lead to
sluggish growth, Eyzaguirre said.

For Latin America, a slower European economy should not
have a major impact because trade ties between the two regions
are comparatively low, especially as the U.S. economy recovers
and Asia continues to grow at fast rates, he argued.

“We still believe the main risk (for Latin America) going
forward is the other way around — complacency and too much
financing and too much (government) expenditure, Eyzaguirre
said. “The overwhelming risk is to go too fast.”

Investing

(Editing by Andrew Hay)

UPDATE 1-Europe unlikely to become new Lehman – IMF