FRANKFURT--Europe won't solve the sovereign-debt crisis without a cooperative element among the countries involving mutual trust and mutual assurance, said Mohamed El-Erian, chief executive and co-chief investment officer of Pimco, or Pacific Investment Management Company LLC, the world's biggest bond fund manager.

European countries need mutual assurances such as "I trust you that you're doing what you say, you trust me that I'm doing what I say," Mr. El-Erian told a banking conference Wednesday.

"Europe has been desperately lacking mutual assurance and trust," he said.

On Greece--which struggles to meet austerity goals required to receive further bailout tranches, and where growth is lower than projected while debt and fiscal deficits are much higher than forecast--a major decision will be needed as to whether the country will be able to stay in the euro zone or will have to exit.

"This is a European decision that has be made by Europe," Mr. El-Erian said.

The euro zone will still exist in three years, Mr. El-Erian said, adding that turning from Greece to Portugal, Ireland, Spain and Italy, there is "more and more hope" and "no reason why stability and growth can't be restored in these countries."

Pimco just concluded its economic-growth forecast exercise last Friday, Mr. El-Erian said. For the U.S., it expects economic growth of between 1% and 1.5% over the next 12 months; for Europe, expectations are for a contraction of 1% to 1.5% in that period; China is expected to expand by 6% and 7%, and the global economy will expand by 2% to 2.5%, Mr. El-Erian said.

Mr. El-Erian is a renowned investment professional in the asset-management world. Pimco, owned by Allianz SE (ALV.XE, ALIZF, AZSEY), manages some $1.8 trillion in assets.

Write to Ulrike Dauer at ulrike.dauer@dowjones.com