The unsurprising surprise of Europe's economic woes and the IMF's latest predictions gets the once-over from new Pundit Fiona McMillan, a London-based New Zealand business journalist.

What's perhaps most amazing about Europe's growth story -- or non-growth story--- is that markets and the folk who watch them continue to react to new data as if it still contains some element of surprise.

Yesterday's IMF growth forecasts are a case in point.

The Fund's flagship report, The World Economic Outlook, predicted four percent growth around the world next year, down half a percent on its predictions in June. The forecast for Asia's emerging economies was for a cooling, but was still at eight percent. Worst of all, rich countries are barely moving, with the IMF picking 1.5 percent growth in the US and the Japanese economy expected to contract.

Europe has to get its act together, says the International Monetary Fund, as it cut its growth forecast for the euro-zone this year to 1.6%, down half a percent on its June forecast. Act now or suffer "severe repercussion", even a "lost decade" of growth, it said.

Well yes indeed. I would personally never say "tell us something we don't know" to the elegant and rather fabulous Christine Lagarde, the newish head of the IMF, but I might rather quietly think it. 

The 'pull yourselves together' message sounds rather a lot like what US Treasury Secretary Timothy Geithner told European finance ministers late last week when he made a very brief trip to an unpronounceable Polish town to join a Euro Group meeting. There is a direct correlation between how big a deal the visit is and the obscurity of the town it took place in. So last week, you know Mr Geithner was very serious indeed to come all the way to Wroclaw to dish up a  stern finger wagging. Serious, but again, not surprising.

The biggest non-suprise on the way is the possibility of a Greek default. Who expects it? Plenty of the people we speak to at CNBC. Some would even welcome it.

Globally renowned economist Nouriel Roubini thinks Greece should give up and get out now. Leave the euro and let currency depreciation sort out the growth problem, although yes, he admits that might produce something of a problem for European banks. Foreign banks after all, hold about 35 billion euros of Greek debt.

Roubini compares Greece's need to leave the euro to the need of a spouse to leave a bad marriage, saying its better to have rules that make separation less costly to both sides. His view is one of the more extreme out there -- few talk about leaving the euro as a good thing -- but more and more talk about default and express the view that it should at least be orderly.

So if default does come, when will this particular "surprise" hit?  How about just in time for Christmas.

Right now, the sixth payment to the Greeks from the IMF and the euro area member states is still being ironed out. That's why you've seen so many stories about the troika making grumpy noises and Greek leaders making squeaky, compliant, austerity-loving noises. Its the seventh payment, some five billion euros of international money that many think is in doubt. That is due in December. 

So expect a Greek default in December? Well, no. 'Expect' is a bit too strong perhaps, but be prepared. My colleague Ross Westgate points out that there was something very interesting about the timing of the coordinated central bank action we saw last week.

Five of the world's biggest central banks launched a series of three month liquidity operations which just happen to mean that there will be plenty of dollar liquidity available in December and January. A surprising co-incidence? Co-incidence just maybe.

Surprise? Not so much.

Comments (2)

by Tim Watkin on September 22, 2011
Tim Watkin

I'd like you all to welcome Fiona on-board the good ship Pundit. She was a great producer at TVNZ on several programmes before heading to the UK. Fiona now lives in London with her husband and kids and is no less than the Executive Producer of CNBC's Worldwide Exchange, which pitches itself as "the first worldwide daily pre-market news program".

With three anchors on three continents, it's quite a big deal. Lord knows how she's finding time to write for us.

But she's joining us to offer some smart, global business analysis, which we figure could be useful right about now given the state of, y'know, the global economy and stuff. Enjoy... Debate.. Etc...

by Frank Macskasy on September 25, 2011
Frank Macskasy

Welcome aboard, Fiona. I look forward to your insights...

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