IPREDICT LTD

NEW ZEALAND WEEKLY ECONOMIC & POLITICAL UPDATE

Tuesday 27 January 2015

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

JUDITH COLLINS PICKED TO RETURN TO CABINET BEFORE NEXT ELECTION

Judith Collins is this week picked to make a return to Cabinet before the next election, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. John Key is expected to remain leader of the National Party until at least the end of 2016 and National is expected to win the election the following year. Annual inflation is expected to remain at or below 1% for the rest of this year and there is now a bias towards the possibility of a cut in the Official Cash Rate. The UK Labour Party is expected to win the most seats in the next House of Commons but David Cameron is expected to remain prime minister. Hillary Clinton remains favourite to be the next US president.

Economics:

• Quarterly GDP growth expected to be:

o 0.9% in the December 2014 quarter (steady compared with last week)

o 0.7% in the March quarter (steady)

o 1.1% in the June quarter (steady)

o 1.1% in the September quarter (steady)

o 1.1% in the December quarter (steady)

• Annual growth expected to be 4.1% in the 2015 calendar year (steady)

• Unemployment expected to be:

o 5.3% in the December 2014 quarter (steady compared with last week)

o 5.3% in the March quarter (steady)

o 5.2% in the June quarter (steady)

o 5.2% in the September quarter (steady)

o 5.3% in the December quarter (steady)

• Current account deficit expected to be 3.4% of GDP in the December quarter (steady compared with last week)

• Annual inflation expected to be:

o 0.5% to end of March 2015 quarter (down from 0.6% last week)

o 0.7% to end of June 2015 quarter (down from 0.8%)

o 0.8% to end of September 2015 quarter (down from 1.0%)

o 1.0% to end of December 2015 quarter (down from 1.4%)

• Official Cash Rate priced to be:

o 3.500% on 29 January (down from 3.507% last week)

o 3.485% on 12 March (down from 3.493%)

o 3.467% on 30 April (down from 3.476%)

o 3.451% on 11 June (down from 3.462%)

o 3.435% on 23 July (down from 3.449%)

o 3.429% on 10 September (down from 3.456%)

o 3.423% on 29 October (down from 3.466%)

o 3.433% on 10 December 2015 (down from 3.486%)

o OCR stocks out to June 2016 will be launched in the near future

• Only 13% probability of a fiscal surplus in 2014/15 (steady)

• Fiscal balance expected to be:

o -0.23% of GDP in 2014/15 (up from -0.25% last week)

o 0.84% of GDP in 2015/16 (steady)

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

o 2.41% of GDP in 2017/18 (up from 2.37%)

Politics:

• John Key is expected to remain National leader until at least the end of 2016 (80% probability, up from 79% last week) and has a 49% probability of remaining National leader until at least the end of 2017 (up from 48%)

• Steven Joyce returns as favourite to become National Party leader if a vacancy arises(28% probability, up from 26% last week), followed by Paula Bennett (25%, down from 27%) Bill English (11%, up from 9%) and Simon Bridges (9%, steady)

• Stocks on Andrew Little’s longevity as leader of the Labour Party will be launched in the near future

• Judith Collins expected to be appointed to Cabinet before next election (65% probability, up from 45% last week)

• Next election expected in 2017 (93% probability, up from 90% last week)

• Forecast party vote shares at next election:

o National 45.4% (steady compared with last week)

o Labour 31.8% (down from 32.0%)

o Greens 11.2% (down from 11.3%)

o NZ First 7.0% (steady)

o Others 4.6% (up from 4.3%)

• National expected to win 2017 General Election (55% probability, steady)

Foreign Affairs/Constitution:

• Next UK Parliament expected to consist of:

o Labour 40.8% of seats in the House of Commons

o Conservatives 37.9% of seats

o UKIP and similar 6.0% of seats

o Liberal Democrats 5.1% of seats

o Unionist parties 2.2% of seats

o Independents and Speaker 2.0% of seats

o Green and similar 2.0% of seats

o Nationalist parties 1.9% of seats

o All others 2.1% of seats

• David Cameron expected to be prime minister after next UK election (57% probability, down from 60% last week)

• Tony Abbott’s Liberals are narrowly expected to win the next Australian Federal election in 2016 (53% probability, steady)

• Hillary Clinton is favoured to be the Democratic Party’s nominee for US president in 2016 and to be elected to that office (49% probability, up from 48% last week)

• The Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 31% probability it will be, steady compared with last week)

• Helen Clark’s prospects of being the next UN Secretary General are 25% (down from 27% last week)

• There is an 18% 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 12.28 pm today.

ENDS

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