Monday 30 March 2015

Bennett Now Clear Favourite to Succeed Key

Paula Bennett is now the clear favourite to succeed John Key as leader of the National Party after Steven Joyce’s prospects plunged to just 13%, only one point ahead of Jonathan Coleman, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. Mr Key’s medium-term hold on the leadership remains strong however, with only a 27% probability he will step down before the next General Election – although there is now a 77% chance he will be gone by the end of 2017. There is nearly a 50% probability New Zealand will sign the controversial Trans-Pacific Partnership in 2015 but just a 33% chance it will be ratified by the US Congress before mid-2017.

New Zealand Politics:

• John Key expected to remain National leader until at least the end of 2016 (79% probability, down from 88% last week) but has just a 23% probability of remaining National leader until at least the end of 2017 (down from 32% last week). Mr Key has a 73% probability of being National leader on Nomination Day before the next General Election (new stock)

• Andrew Little expected to remain Labour leader until at least the end of 2016 (95% probability, down from 97% last week) and has a 68% probability of remaining Labour leader until the end of 2017 (down from 72% last week). Mr Little has a 90% probability of being Labour leader on Nomination Day before the next General Election (new stock)

• Paula Bennett is the clear favourite to become National Party leader if a vacancy arises (35%, up from 33% last week), followed by Steven Joyce (13%, down from 26%) and Jonathan Coleman (12%)

• Stocks on who is favoured to become Labour Party leader if a vacancy arises will be launched in the near future

• Kevin Hague is strongly expected to be the next co-leader of the Green Party (82% probability, up from 62% last week), followed by James Shaw on 14%

• Judith Collins expected to be appointed to Cabinet before next election (55% probability, steady compared with last week)

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

• Forecast party vote shares at next election:

o National 44.2% (down from 45.1% last week)

o Labour 32.8% (up from 32.6%)

o Greens 11.0% (steady)

o NZ First 7.2% (up from 6.9%)

o Others 4.8% (up from 4.4%)

• National narrowly expected to win 2017 General Election (53% probability, down from 55% last week)

• Almost no chance Wellington councils will be amalgamated by end of 2015 (only 7% probability they will be, up from 6% last week)

New Zealand Economics:

• Fruit-fly outbreak expected to be contained with fewer than 20 Queensland fruit-flies expected to be found in New Zealand as part of current outbreak (82% probability, up from 79% last week)

• New Zealand dollar expected to reach parity with Australian dollar by the end of 2015 (55% probability, down from 57% last week) but not before July 2015 (20% probability, down from 23%)

• Quarterly GDP growth expected to be:

o 0.8% 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 (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 (steady)

o 5.2% in the September quarter (steady)

o 5.3% in the December quarter (steady)

• Current account deficit expected to be:

o 3.6% of GDP in the March quarter (steady compared with last week)

o 3.5% in the June quarter (steady)

o 3.4% in the September quarter (steady)

o 3.5% in the December quarter (new stocks)

• Annual inflation expected to be:

o 0.3% to end of March 2015 quarter (up from 0.2% last week)

o 0.4% to end of June 2015 quarter (steady)

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

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

• Official Cash Rate priced to be:

o 3.488% on 30 April (steady compared with last week)

o 3.475% on 11 June (steady)

o 3.458% on 23 July (up from 3.455%)

o 3.424% on 10 September (up from 3.417%)

o 3.405% on 29 October (up from 3.395%)

o 3.387% on 10 December (up from 3.377%)

o 3.377% on 28 January 2016 (up from 3.367%)

o 3.374% on 10 March 2016 (up from 3.364%)

o 3.364% on 28 April 2016 (up from 3.354%)

o 3.354% on 9 June 2016 (up from 3.344%)

• This implies the OCR is more likely than not to be cut on 28 January 2016 to 3.25% (steady compared with last week) and to remain at that rate until at least 9 June 2016 (steady)

• 28% probability of a fiscal surplus in 2014/15 (steady compared with last week)

• Fiscal balance expected to be:

o -0.14% of GDP in 2014/15 (up from -0.16% last week)

o 0.80% of GDP in 2015/16 (steady)

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

o 2.32% of GDP in 2017/18 (down from 2.43%)

• Fonterra’s final payout (before retentions) expected to be:

o $4.79 in 2014/15 (down from $4.82 last week)

o $5.86 in 2015/16 (down from $6.10)

o $6.43 in 2016/17 (down from $6.49)

Foreign Affairs/Constitution:

• Next UK Parliament expected to consist of:

o Conservatives 37.9% of seats in the House of Commons (steady compared with last week)

o Labour 35.3% of seats (steady)

o Nationalist parties 7.1% of seats (steady)

o UKIP and similar 6.0% of seats (steady)

o Liberal Democrats 5.2% of seats (down from 5.3%)

o Unionist parties 2.2% of seats (steady)

o Green and similar 2.1% of seats (steady)

o Independents and Speaker 2.1% of seats (steady)

o All others 2.2% of seats (steady)

• David Cameron expected to be prime minister after next UK election (58% probability, down from 63% last week)

• Boris Johnson expected to be elected to UK House of Commons this year (91% probability, steady)

• Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (75% probability, up from 71% last week)

• All Eurozone countries, including Greece, expected to remain in Euro in 2015 (21% probability of an announcement of a departure this year, down from 23% last week)

• Tony Abbott is expected to remain leader of the Australian Liberal Party until 1 July 2015 (only 23% probability of departing before then, steady compared with last week) but be replaced as leader of the Australian Liberal Party by nomination day (53% probability Malcolm Turnbull will be leader on that day, up from 50% last week)

• Bill Shorten expected to be Labor leader at next Australian Federal election (86% probability, down from 88% last week)

• Liberals marginally ahead of Labor for next Australian Federal election in 2016 (53% probability of Liberal win, 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 (49% probability, up from 47% last week). Jeb Bush has a 45% probability of being the Republican nominee (steady compared with last week) followed by Scott Walker (20% probability, up from 19%)

• There is a 48% probability New Zealand will sign the Trans-Pacific Partnership this year (up from 17% last week), but the Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 33% probability it will be, up from 31% last week)

• Helen Clark’s prospects of being the next UN Secretary General are 25% (steady compared with last week)

• There is a 10% probability New Zealand will become a republic by 2020 (steady compared with last week)

• Ireland to vote in favour of same-sex marriage before July 2015 (95% probability, steady compared with last week)

• There is a 17% probability Kim Jong-Un will cease being leader of North Korea before 2017 (down from 18% with last week)

Notes:

• iPredict Ltd is owned by Victoria University of Wellington. Details on the company and its stocks can be found atwww.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 8.13 am today.

ENDS

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