IPREDICT LTD

NEW ZEALAND WEEKLY ECONOMIC & POLITICAL UPDATE

Friday 20 February 2015

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

WINSTON PETERS NOT EXPECTED TO STAND IN NORTHLAND BY-ELECTION

NZ First leader Winston Peters will not stand in the Northland by-election, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. National is then expected to win the by-election with more than 50% of the vote. The SkyCity convention centre affair appears not to have hurt John Key, Steven Joyce or the National Party. Mr Key is overwhelmingly expected to remain leader of the National Party until the beginning of 2017 and his party is narrowly expected to win the election that year. If there is a vacancy in National’s leadership, Mr Joyce has moved ahead of Paula Bennett as favourite to fill it. Annual inflation is expected to remain below 1% until the December quarter but the Official Cash Rate is longer expected to be cut this year. New Zealand is not expected to sign the new Trans-Pacific Partnership this year. TheWellington local body amalgamation will proceed this year. The British election is getting closer between the Conservatives and Labour.

Northland By-election:

• Winston Peters is not expected to be the NZ First candidate for the Northland by-election(only a 33% probability he will be)

• Labour candidate expected to win more than 25.89% of the vote in the Northland by-election (87% probability Labour will beat this score)

• National candidate expected to win more than 50% of the vote in the Northland by-election (70% probability National candidate will beat this score)

• Only 5% probability a candidate from other National or Labour will win Northland by-election

New Zealand Politics:

• John Key is expected to remain National leader until at least the end of 2016 (79% probability, down from 81% last week) and has a 49% probability of remaining National leader until at least the end of 2017 (down from 50%)

• Steven Joyce returns as favourite to become National Party leader if a vacancy arises(27%, up from 24% last week), followed by Paula Bennett (24%, down from 26%), Amy Adams (11%, up from 6%) and Judith Collins (9%, up from 5%)

• 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 (62% probability, up from 61% last week)

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

• Forecast party vote shares at next election:

o National 45.2% (steady compared with last week)

o Labour 32.0% (up from 31.9%)

o Greens 11.1% (steady)

o NZ First 6.9% (down from 7.0%)

o Others 4.8% (up from 4.6%)

• National expected to win 2017 General Election (57% probability, steady compared with last week)

• Wellington councils expected to be amalgamated by end of 2015 (832% probability)

New Zealand Economics:

• Quarterly GDP growth expected to be:

o 0.7% in the March quarter (up from 0.6% last week)

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 4.0% in the 2015 calendar year (steady compared with last week)

• Unemployment expected to be:

o 5.4% in the March quarter (steady compared with last week)

o 5.3% in the June quarter (up from 5.2%)

o 5.2% in the September quarter (steady)

o 5.3% in the December quarter (steady)

• Current account deficit expected to be 3.5% of GDP in the December quarter (up from 3.4% last week) and 3.4% in the March quarter (steady)

• Annual inflation expected to be:

o 0.3% to end of March 2015 quarter (up from 0.1% last week)

o 0.6% to end of June 2015 quarter (down from 0.7%)

o 0.8% to end of September 2015 quarter (steady)

o 1.0% to end of December 2015 quarter (steady)

• Official Cash Rate priced to be:

o 3.491% on 12 March (up from 3.485%)

o 3.486% on 30 April (up from 3.470%)

o 3.451% on 11 June (up from 3.427%)

o 3.421% on 23 July (up from 3.397%)

o 3.395% on 10 September (up from 3.371%)

o 3.376% on 29 October (up from 3.355%)

o 3.380% on 10 December 2015 (up from 3.359%)

o This implies the OCR is more likely than not to remain at 3.50% throughout the calendar year (compared with a cut being more likely than not on 10 September last week)

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

• Only 18% probability of a fiscal surplus in 2014/15 (up from 13% last week)

• Fiscal balance expected to be:

o -0.17% of GDP in 2014/15 (up from -0.26% last week)

o 0.75% of GDP in 2015/16 (down from 0.84%)

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

o 2.38% of GDP in 2017/18 (down from 2.39%)

Foreign Affairs/Constitution:

• Next UK Parliament expected to consist of:

o Conservatives 37.9% of seats in the House of Commons (up from 37.0% last week)

o Labour 37.1% of seats (down from 37.3%)

o Nationalist parties 6.6% of seats (down from 6.9%)

o UKIP and similar 5.7% of seats (steady)

o Liberal Democrats 4.9% of seats (steady)

o Unionist parties 2.1% of seats (steady

o Green and similar 1.9% of seats (down from 2.0%)

o Independents and Speaker 1.9% of seats (down from 2.0%)

o All others 2.0% of seats (down from 2.1%)

• David Cameron expected to be prime minister after next UK election (55% probability, down from 57% last week)

• Boris Johnson expected to be elected to UK House of Commons this year (95% probability)

• Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (60% probability, steady compared with last week)

• All Eurozone countries, including Greece, expected to remain in Euro in 2015 (only 29% probability of an announcement of a departure this year, steady compared with last week)

• Tony Abbott is expected to remain leader of the Australian Liberal Party until 1 July 2015(only 20% probability of departing before then ,down from 25% last week) but be replaced by Malcolm Turnbull as leader of the Australian Liberal Party by nomination day (60% probability Turnbull will be leader on that day, down from 62% last week)

• Liberals and Labor neck and neck for next Australian Federal election in 2016 (both on 50%, steady compared with last week)

• Hillary Clinton is favoured to be the Democratic Party’s nominee for US president in 2016 and to be elected to that office (46% probability, down from 50% last week). Jeb Bush has a 39% probability of being the Republican nominee (steady compared with last week) followed by Scott Walker (25%)

• There is only a 25% probability New Zealand will sign the Trans-Pacific Partnership this year, and 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 27% (steady compared with last week)

• There is a 15% probability New Zealand will become a republic by 2020 (down from 18% 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 10.02 am today.

ENDS

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