iPredict Ltd

New Zealand Weekly Economic & Political Update

Monday 3 November 2014

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

INFLATION AND INTEREST RATE EXPECTATIONS CONTINUE TO FALL

Inflation and interest-rate expectations continue to fall, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. Former prime minister Helen Clark’s prospects of becoming the next Secretary-General of the United Nations have reached 40%. Andrew Little remains favoured to be the next leader of the Labour Party and there is at least a 55% probability his deputy will be a woman. Jonathan Coleman has emerged as a contender to eventually replace John Key as National Party leader, with 9% probability, behind the favourites Steven Joyce and Paula Bennett.

Politics:

• Next Labour Leader expected to be:

o Andrew Little 69% probability (up from 68% probability last week)

o Grant Robertson 26% probability (steady compared with last week)

o David Parker 5% probability (down from 6% last week)

o Nanaia Mahuta 0% probability (steady compared with last week)

• Next Labour Deputy Leader expected to be:

o Jacinda Ardern 31% probability (down from 38% last week)

o Annette King 13% probability (up from 12% last week)

o Nanaia Mahuta 11% probability (up from 7% last week)

o Grant Robertson 10% probability (down from 12% last week)

o Andrew Little 8% probability (down from 9% last week)

o David Parker 7% probability (steady compared with last week)

o David Shearer 5% probability (down from 6% last week)

o Stuart Nash 4% probability (steady compared with last week)

o Other 13% probability (up from 4% last week)

• John Key expected to remain National leader until at least the end of 2016 (72% probability, down from 74% last week) and has a 47% probability of remaining National leader until at least the end of 2017 (down from 49% last week)

• Steven Joyce is favourite to become National Party leader if a vacancy arises, (32% probability, down from 33% last week), followed by Paula Bennett (29%, down from 30% last week), Jonathan Coleman (9%, up from 3% last week) and Simon Bridges (7%, steady compared with last week)

• Next election expected in 2017 (92% probability, steady compared with last week)

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

Economics:

• Quarterly GDP growth expected to be:

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

o 0.8% in the December quarter (steady compared with last week)

o 1.0% in the March 2015 quarter (steady compared with last week)

o 1.1% in the June 2015 quarter (steady compared with last week)

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

• Current account deficit expected to be 2.6% of GDP in the September quarter (steady compared with last week) and 3.9% of GDP in the December quarter (steady)

• Annual inflation expected to be:

o 1.1% to end of December quarter (down from 1.2% last week)

o 1.4% to end of March 2015 quarter (down from 1.5% last week)

o 1.8% to end of June 2015 quarter (steady compared with last week)

o 2.1% to end of September 2015 quarter (new this week)

• Official Cash Rate priced to be:

o 3.500% on 11 December (down from 3.509% last week)

o 3.505% on 29 January (down from 3.518% last week)

o 3.517% on 12 March (down from 3.552% last week)

o 3.552% on 30 April (down from 3.608% last week)

o 3.605% on 11 June (down from 3.693% last week)

o OCR stocks out to June 2016 will be launched this week

• Fiscal balance expected to be:

o -0.04% of GDP in 2014/15 (up from -0.07% 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:

• There is a 36% probability New Zealand and South Korea will sign a Free Trade Agreement by 1 December 2014 (down from 43% 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)

• Helen Clark’s prospects of being the next UN Secretary General have improved to 40% probability, up from 35% last week

• There is a 19% probability New Zealand will become a republic by 2020 (down from 21% last week)

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 12.51 pm today.

ENDS

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