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IPREDICT Economic & Political Newsletter #4

Economic & Political Newsletter #4
3 March 2012

Key Points:

Julia Gillard now safe as Labor leader but set to lose 2013 Australian Federal Election to Liberal Tony Abbott
New Zealand National in further trouble, with UnitedFuture expected to leave Parliament in 2014 and Labour favoured to form Government
John Key to depart as National Party leader by end of 2014 with Judith Collins favoured to replace him
Liberal National overwhelmingly favoured for Queensland election, and Campbell Newman expected to win Ashgrove
Bob Parker in trouble in Christchurch with Peter Beck and Lianne Dalziel expected to stand for Mayor
iPad 3 to be announced this month
Economic indicators remain steady
Petrol prices heading up and Fonterra payout down
Neutrinos not expected to exceed the speed of light in 2012
Change of leaders expected at Chinese central bank and finance ministry

Hot Topics
Changes of government are forecast in Brisbane, Canberra and Wellington over the next three years, this week’s snapshot from New Zealand’s online predictions market, iPredict, suggests.
According to iPredict’s 6000 registered trader, there is now only a 35% probability Australian Prime Minister Julia Gillard will depart as leader of the Labor Party before the next federal election, due in 2013, down from 77% before the recent party room ballot. However, the Liberal/National Coalition has a 76% probability of winning the next federal election.
Labor is also in trouble in Queensland, with the Liberal National Party having a 94% probability of winning this month’s state election and with leader Campbell Newman having an 87% probability of making it into parliament in Ashgrove.
In New Zealand, the National-led Government’s one-seat coalition partner, UnitedFuture, is now not expected to win any seats in Parliament in 2014, increasing the probability Labour will lead the next New Zealand Government from 56% to 57%. David Shearer now has a 43% probability of being New Zealand Prime Minister before 1 January 2015, up from 40% last week.
In business, there is a 98% probability that there will be a formal announcement of the iPad 3 in March 2012.
In science, there is now only a 9% probability the OPERA experiment showing neutrinos exceeding light speed will be replicated in 2012.
Economic forecasts have remained broadly stable this week, although New Zealand petrol prices appear to be on their way up while Fonterra’s payout forecasts are heading down.
New Zealand Economic Forecasts
New Zealand growth prospects have remained steady this week with growth expected to be 0.6% for the December 2011 quarter, 0.5% for the March 2012 quarter and 0.4% for the June 2012 quarter.
Forecast unemployment has remained unchanged this week. Unemployment is forecast to be 6.4% for the March 2012 quarter and 6.3% for the June 2012 quarter.
Inflationary expectations have remained steady this week. Inflation continues to be forecast to be 1.6% for the March 2012 quarter, 1.6% for the June 2012 quarter and 2.0% for the September 2012 quarter.
The Official Cash Rate is not expected to be increased until October 2012 at the earliest.
Petrol prices are set to rise with the market now predicting there is a 58% probability that 91 unleaded petrol prices will be between 216 and 224 cents for the week ended 30 March 2012.
The 2011/12 Fonterra payout is now expected to be $7.02 per kilogram of milk solids before retentions, down 8c over the week. The forecast payout for 2012/13 has slipped $0.01 to $7.10, while forecast 2013/14 and 2014/15 payouts have remained steady at $7.42 and $7.46 respectively.
Current account deficit expectations are 4.07% of GDP to December 2011, and 4.13% to March 2012.
International Economic Forecasts
World growth is expected to be 3.18% for the 2012 year.
There is now a 28% chance at least one Euro member will depart the single currency in 2012.
The Reserve Bank of Australia is not expected to change its cash rate from 4.00% at its meeting on 6 March 2012.
There is only a 40% probability the US Senate will formally approve a resolution of ratification of the Trans Pacific Partnership by July 2015.
International Politics
Australian first preferences at the 2013 federal election are expected to be: Labor 35.4%, Liberal 33.9%, Greens 11.9%, Queensland Liberal National 9.4%, and all other parties 9.4%. Stocks for smaller parties and for the two-party preferred vote will be launched this week. There is only a 37% probability that Julia Gillard will depart as Labor leader before the next Federal election, but a 76% probability that she will lose the next Federal election. Campbell Newman is expected to win Ashgrove in the next Queensland state election and his Liberal National Party to defeat Labor.
In China, Wen Jinbao is expected to remain the Premier of the People's Republic of China until at least 1 January 2013, Yang Jiechi is expected to remain Minister of Foreign Affairs and Chen Deming to remain Commerce and Trade Minister. However, Zhou Xiaochuan is expected to be replaced as Governor of the People's Bank of China by year’s end, as is Xie Xuren as Minister of Finance,
In the US, Barrack Obama has a 65% probability of being re-elected US President, defeating Mitt Romney who has an 83% chance of being the Republican nominee. Romney remains favoured to win the primaries or caucuses in Washington, Alaska, Idaho, Massachusetts, Ohio, Vermont and Virginia Primary.
In the UK, the Conservative / Liberal Democrat coalition is expected to survive 2012.
In France, however, there is a 62% probability Francois Hollande will win the presidential election over incumbent Nicolas Sarkozy.
In Syria, Bashar al-Assad is expected to remain in power until at least 1 June 2012.
There is a 31% probability Israel will launch an airstrike against Iran in 2012 and a 13% probability North Korea will detonate an atomic device.
Science and Climate Change
There is a 66% probability average global temperatures will be hotter in 2012 than in 2011 and a 13% probability 2012 will be the hottest year on record. There is only a 9% probability the OPERA experiment showing neutrinos exceeding light speed will be replicated in 2012. There is a 98% probability that there will be a formal announcement of the iPad 3 in March 2012.
New Zealand Politics
Peter Dunne's UnitedFuture is no longer expected to win a seat in the next election, ending his 28 years service in Parliament.
The Maori Party is expected to win three electorate seats and the Mana Party one seat. Act has a 52% probability of winning an electorate seat. The Green, New Zealand First and Conservative parties are not expected to win any electorate seats.
Party vote forecasts are: National 42.6%, Labour 34.5%, Greens 9.6%, NZ First 5.1%, Conservative 2.7%, Act 1.7%, Maori Party 1.4%, Mana Party 1.3%, and UnitedFuture 0.5%. Parliament would consist of: National 53 MPs, Labour 43 MPs, the Greens 12 MPs, New Zealand First 6 MPs, the Maori Party 3 MPs, Act and the Mana Party 2 MPs each, and UnitedFuture no MPs. There would be 121 MPs, requiring 61 to govern.
David Shearer’s Labour Party could form a Government with the support of the Greens, New Zealand First, and either of the Maori or Mana Partys. Alternatively, John Key’s National Party could mathematically pull together a Government with the support of NZ First and Act.
Overall, there is a 57% probability Labour will form a Government after the next General Election, with a 43% probability David Shearer will be Prime Minister by 1 January 2015.
There is a 61% probability John Key will step down as Leader of the National Party by the end of 2014.
Grant Robertson and Judith Collins are favoured should there be a vacancy in the leadership of either the Labour or National parties.
In New Zealand mayoral races, Bob Parker is set to lose Christchurch and Celia Wade-Brown to lose Wellington. Peter Beck and Lianne Dalziel are both expected to stand for Christchurch mayor. Dave Cull in Dunedin, Tim Shadbolt in Invercargill, Len Brown in Auckland, Julie Hardaker in Hamilton and Jono Naylor in Palmerston North all look safe.
iPredict is owned by Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz. The weekly snapshot is taken at a random time each week. This week’s was taken on Friday 2 March.

© Scoop Media

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