Mohamed El-Erian, chief economic advisor at Allianz, said Thursday that the Federal Reserve will not be able to stop the financial markets from freezing amid economic fallout from the coronavirus outbreak.

"You need a lot of cash and very little debt to navigate what's ahead, because markets will start freezing up even if the Fed cuts rates, which I think it will," El-Erian said on CNBC's "Closing Bell," advising investors to focus on companies with strong balance sheets.

El-Erian said that the economy will need a medical solution to the outbreak to recover, and that the Fed cutting rates will not be able to help.

"All that that's going to do is help balance sheets and give some minor relief to markets," El-Erian said. "But it's not going to encourage people to travel. It's not going to encourage people in China to go back to work."

The market continued its rapid decline Thursday, with the Dow Jones Industrial Average falling more than 4.4%. El-Erian said he expects stocks to continue to drop in the coming days.

"It's not yet safe in my opinion to get back into the market as a whole. You've got to let these economic and natural dynamics play out before the market is attractive enough for the sort of risk that is ahead," El-Erian said.