Obama: Greece crisis could hit EU growth but no 'major shock to system'

(WASHINGTON) - US President Barack Obama warned Tuesday the unfolding Greek financial crisis could have a "significant effect" on European growth but said it would exert no "major shock" on the global system.

With cash-strapped Greece on the edge of default on its debt to the International Monetary Fund, Obama called the situation in the eurozone country one "of substantial concern."

"Obviously it's very painful for the Greek people and it can have a significant effect on growth rates in Europe," he said during a joint White House press conference with visiting Brazilian President Dilma Rousseff.

However, he added, "In layman's terms, for the American people, this is not something that we believe will have a major shock to the system."

Obama nevertheless said the continuing crisis, with Greece unable to come to a new agreement on bailout funds with its official creditors, would have an impact beyond Europe's borders.

"If Europe's not growing the way it needs to grow, that has an impact on us, it has an impact on Brazil. Those are major export markets and that can have a dampening effect on the entire world economy," he said.

He repeated the US call for European and Greek officials to continue to negotiate in hopes of reaching a deal that would help stabilize the country and prevent Athens from exiting the eurozone.

"Essentially what you have here is a country that has gone through some very difficult economic times, (that) needs to find a path towards growth and a path to say in the eurozone," he said.

He assured that US officials were in regular contact with European counterparts, and were working with the European Central Bank and other institutions to ensure the financial system continues to work smoothly.