New Zealand Weekly Economic & Political Update

Monday 13 October 2014

www.ipredict.co.nz

www.electionresults.co.nz

LITTLE CLEAR FAVOURITE FOR LABOUR LEADERSHIP

Andrew Little is now the clear favourite to become the next leader of the New Zealand Labour Party, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. The market is narrowly forecasting he will then lose the 2017 election to National’s John Key. Inflation and interest rate expectations have both eased this week, but unemployment is expected to rise marginally in the December 2017 quarter. A small fiscal surplus of 0.08% of GDP continues to be expected in 2014/15. The chances of New Zealand being elected to the UN Security Council have improved to 70%.

Politics:

• Next Labour Leader expected to be:

o Andrew Little 62% probability (up from 30% probability last week)

o Grant Robertson 22% probability (down from 34% last week)

o David Parker 11% probability (not reported last week)

o David Shearer 4% probability (not reported last week)

o Jacinda Ardern 1% probability (not reported last week)

• John Key expected to remain National leader until at least the end of 2016 (69% probability, down from 74% last week) and has a 49% probability of remaining National leader until at least the end of 2017

• Steven Joyce is favourite to become National Party leader if a vacancy arises, (39% probability, up from 34% last week), followed by Paula Bennett (29%, down from 32% last week), Simon Bridges (8%, steady) and Bill English (8%, up from 5% last week)

• Next election expected in 2017 (92% probability, up from 87% last week)

• National expected to win 2017 General Election (53% probability, up from 52%)

Economics:

• Quarterly GDP growth expected to be:

o 0.8% of GDP in the September quarter (steady compared with last week)

o 1.0% in the December quarter (steady)

o 1.0% in the March 2015 quarter (steady)

o 1.1% in the June 2015 quarter (steady)

• Unemployment expected to be 5.4% in September quarter (steady compared with last week) and 5.5% in the December quarter (up from 5.4% last week)

• Current account deficit expected to be 3.2% of GDP in the September quarter (down from 3.4% last week) and 4.0% of GDP in the December quarter (steady)

• Annual inflation expected to be:

o 1.2% to end of September quarter (down from 1.3% last week)

o 1.4% to end of December quarter (down from 1.6%)

o 1.8% to end of March 2015 quarter (down from 1.9%)

o 2.2% to end of June 2015 quarter (steady)

• Official Cash Rate priced to be:

o 3.500% on 30 October (down from 3.502% last week)

o 3.509% on 11 December (down from 3.520%)

o 3.527% on 29 January (down from 3.550%)

o 3.599% on 12 March (down from 3.627%)

o 3.691% on 30 April (down from 3.719%)

o 3.817% on 11 June (down from 3.836%)

• Fiscal surplus expected to be:

o 0.08% of GDP in 2014/15 (down from 0.18% last week)

o 0.95% of GDP in 2015/16 (steady)

o 1.98% of GDP in 2016/17 (steady)

o 2.37% of GDP in 2017/18 (steady)

Foreign Affairs/Constitution:

• New Zealand expected to be elected to the UN Security Council (70% probability, up from 60% last week), but Helen Clark is not expected to be the next UN Secretary General (only 20% probability, down from 21% last week)

• There is a 33% probability New Zealand and South Korea will sign a Free Trade Agreement by 1 December 2014 (up from 24% last week)

• The Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 20% probability it will be, steady)

• There is a 21% probability New Zealand will become a republic by 2020 (steady)

Notes:

• iPredict Ltd is owned by Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz.

• The weekly economic and political update is prepared by Exceltium Ltd on a pro bono basis and is based on a snapshot taken at a random time each week. This week’s was taken at 2.57 pm today.

ENDS

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