IPREDICT LTD

NEW ZEALAND WEEKLY ECONOMIC & POLITICAL UPDATE

Monday 9 March 2015

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

OSBORNE’S CHANCES PLUNGE IN NORTHLAND

National’s Mark Osborne’s chances of winning the Northland by-election have plunged to just 55%, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. Mr Osborne now has almost no chance of winning more than 50% of the vote and NZ First’s Winston Peters has a 45% chance of taking the seat. While John Key remains safe, Paula Bennett is again favoured to become leader of the National Party if a vacancy arises, ahead of Steven Joyce and Jonathan Coleman. The current Queensland fruitfly outbreak in Grey Lynn is expected to worsen with more than 20 expected to be found. The Official Cash Rate is more likely than not to be cut on or before29 October and then remain at 3.25% until at least the middle of next year. The chances ofWellington’s councils being amalgamated continue to fall. In Australia, the Liberal/National coalition is overwhelmingly expected to win the most seats in the New South Wales state election while Tony Abbott’s short-term position as prime minister has improved, although he is still expected to be replaced before the next federal election by Malcolm Turnbull. In the United Kingdom, the Conservatives have made gains over the last week ahead of the 7 May election.

New Zealand Politics:

• National’s Mark Osborne expected to sneak home in Northland by-election (55% probability, down from 88% last week), falling short of 50% of the vote (only 4% probability of winning more than 50%, down from 29% last week)

• 45% probability the byelection will be won by a candidate from a party other than National or Labour, presumably Winston Peters (up from 11% last week)

• Kevin Hague overwhelmingly favoured to be next Green Party co-leader (90% probability, down from 94% last week), followed by Gareth Hughes on just 8%.

• John Key is expected to remain National leader until at least the end of 2016 (78% probability, down from 79% last week) and has a 50% probability of remaining National leader until at least the end of 2017 (steady)

• Paula Bennett has re-emerged as favourite to become National Party leader if a vacancy arises (26%, down from 29% last week), followed by Steven Joyce (25%, down from 28%) and Jonathan Coleman (13%, up from 4%)

• 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 (75% probability, up from 60% 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 32.1% (steady)

o Greens 11.0% (steady)

o NZ First 6.9% (steady)

o Others 4.8% (steady)

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

• Wellington councils not expected to be amalgamated by end of 2015 (only 33% probability they will be, down form 43% last week)

New Zealand Economics:

• More than 20 Queensland fruitflies expected to be found in New Zealand as part of current outbreak (88% probability, up from 55% last week)

• New Zealand dollar expected to reach parity with Australian dollar by the end of 2015 (69% probability, steady compared with last week) but not before July 2015 (12% probability, down from 30% last week)

• Quarterly GDP growth expected to be:

o 0.7% in the March quarter (steady compared with 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 4.1% in the 2015 calendar year (up from 4.0% 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 (steady)

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 (steady compared with last week) and 3.4% in the March quarter (steady)

• Annual inflation expected to be:

o 0.3% to end of March 2015 quarter (steady compared with last week)

o 0.6% to end of June 2015 quarter (steady)

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 3.495% on 12 March (steady compared with last week)

o 3.488% on 30 April (steady)

o 3.450% on 11 June (up from 3.447%)

o 3.420% on 23 July (down from 3.421%)

o 3.377% on 10 September (down from 3.384%)

o 3.358% on 29 October (down from 3.365%)

o 3.349% on 10 December (down from 3.360%)

o 3.339% on 28 January 2016 (new stocks)

o 3.248% on 10 March 2016 (new stocks)

o 3.338% on 28 April 2016 (new stocks)

o 3.328% on 9 June 2016 (new stocks)

o This implies the OCR is more likely than not to be cut on 29 October to 3.25% (steady compared with last week) but to remain at that rate until at least 9 June 2016

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

• Only 20% probability of a fiscal surplus in 2014/15 (up from 18% last week)

• Fiscal balance expected to be:

o -0.22% of GDP in 2014/15 (down from -0.18% last week)

o 0.80% of GDP in 2015/16 (down from 0.81%)

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

o 2.43% of GDP in 2017/18 (up from 2.38%)

• There is a 57% probability Fonterra’s payout in 2015/16 will be above $6.00 (before retentions) down from 63% last week

Foreign Affairs/Constitution:

• Next UK Parliament expected to consist of:

o Conservatives 38.9% of seats in the House of Commons (up from 34.1% last week)

o Labour 35.3% of seats (down from 38.1% last week)

o Nationalist parties 6.2% of seats (down from 6.8%)

o UKIP and similar 6.0% of seats (down from 6.4%)

o Liberal Democrats 5.2% of seats (down from 5.5%)

o Unionist parties 2.2% of seats (down from 2.3%)

o Green and similar 2.1% of seats (down from 2.2%)

o Independents and Speaker 2.0% of seats (down from 2.1%)

o All others 2.2% of seats (down from 2.3%)

• David Cameron expected to be prime minister after next UK election with 57% probability, up from 52% last week

• Boris Johnson expected to be elected to UK House of Commons this year (92% probability, steady)

• 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 (16% probability of an announcement of a departure this year, up from 12% last week)

• New South Wales Liberal/National Coalition expected to win most seats in NSW state election (92% probability, up from 80% last week)

• Tony Abbott is expected to remain leader of the Australian Liberal Party until 1 July 2015(only 27% probability of departing before then, down from 38% last week) but be replaced by Malcolm Turnbull as leader of the Australian Liberal Party by nomination day (56% probability Turnbull will be leader on that day, down from 60% last week)

• Bill Shorten expected to be Labor leader at next Australian federal election (88% probability, down from 90% last week)

• Liberals marginally ahead of Labor for next Australian Federal election in 2016 (53% probability of Liberal win, up from 52% 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 (44% probability, down from 47% last week). Jeb Bush has a 39% probability of being the Republican nominee (steady compared with last week) followed by Scott Walker (22% probability, steady)

• There is only a 31% probability New Zealand will sign the Trans-Pacific Partnership this year (steady compared with last week), 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 29% (up from 23% last week)

• There is a 9% probability New Zealand will become a republic by 2020 (down from 11% last week)

• Ireland to vote in favour of same-sex marriage before July 2015 (97% probability, up from 92% last week)

• There is a 22% probability Kim Jong-Un will cease being leader of North Korea before 2017

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 1.35 pm today.

ENDS

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