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Peters to Win Northland - iPredict

iPredict Ltd

New Zealand Weekly Economic & Political Update

Thursday 19 March 2015


Winston Peters to Win Northland

After high-volume trading, NZ First leader Winston Peters is now strongly favoured to win the Northland by-election, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. Mr Peters has a 77% chance of winning on 28 March compared with 23% for National’s Mark Osborne. While Labour continues to have no chance of winning the by-election, it and leader Andrew Little have made small gains over the last week in terms of the 2017 general election. The chance of a fiscal surplus in 2014/15 has recovered somewhat to 30%. Short-term inflationary expectations have eased again, the Auckland fruit-fly outbreak now seems to be under control and the Wellington council amalgamation appears doomed. The chance of the New Zealand dollar reaching parity with the Australian dollar has eased to below two-thirds for the first time.

New Zealand Politics:

• NZ First leader Winston Peters is now strongly favoured to win the Northland by-election (77% probability, up from 11% last week), ahead of National’s Mark Osborne (23% probability, down from 55%). Labour’s Willow-Jean Prime continues to have no chance of winning the electorate.

• Kevin Hague remains overwhelmingly favoured to be the next Green Party co-leader (90% probability, steady compared with last week), followed by James Shaw and Gareth Hughes on 5% each.

John Key is strongly expected to remain National leader until at least the end of 2016 (77% probability, down from 78% last week) and has a 51% probability of remaining National leader until at least the end of 2017 (up from 50% last week)

Andrew Little is even more strongly expected to remain Labour leader until at least the end of 2016 (82% probability, new stocks) but has only a 39% probability of remaining Labour leader until the end of 2017 (39% probability)

• Paula Bennett remains favourite to become National Party leader if a vacancy arises (30%, up from 26% last week), followed by Steven Joyce (25%, steady)

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

Judith Collins expected to be appointed to Cabinet before next election (73% probability, down from 75% last week)

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

• Forecast party vote shares at next election:

o National 45.1% (down from 45.2% last week)

o Labour 32.4% (up from 32.1%)

o Greens 11.0% (steady)

o NZ First 6.9% (steady)

o Others 4.6% (down from 4.8%)

• National expected to win 2017 General Election (55% probability, down from 57% last week)

• Almost no chance Wellington councils will be amalgamated by end of 2015 (only 9% probability they will be, down from 33% last week)

New Zealand Economics:

• Fruit-fly outbreak expected to be contained with fewer than 20 Queensland fruitflies expected to be found in New Zealand as part of current outbreak (65% probability, up from 12% last week)

• New Zealand dollar expected to reach parity with Australian dollar by the end of 2015 (62% probability, down from 69% last week) but not before July 2015 (12% probability, steady)

• 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 4.0% in the 2015 calendar year (down from 4.1% 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 March quarter (up from 3.4% last week), 3.4% in the June quarter (new stocks) and 3.4% in the September quarter (new stocks)

• Annual inflation expected to be:

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

o 0.4% to end of June 2015 quarter (down from 0.6%)

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

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

• Official Cash Rate priced to be:

o 3.493% on 30 April (up from 3.488% last week)

o 3.480% on 11 June (up from 3.450%)

o 3.460% on 23 July (up from 3.420%)

o 3.419% on 10 September (up from 3.377%)

o 3.395% on 29 October (up from 3.358%)

o 3.381% on 10 December (up from 3.349%)

o 3.371% on 28 January 2016 (up from 3.339%)

o 3.357% on 10 March 2016 (up from 3.248%)

o 3.347% on 28 April 2016 (up from 3.338%)

o 3.337% on 9 June 2016 (up from 3.328%)

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

• 30% probability of a fiscal surplus in 2014/15 (up from 20% last week)

• Fiscal balance expected to be:

o -0.11% of GDP in 2014/15 (up from -0.22% last week)

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

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

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

• Only a 42% probability Fonterra’s payout in 2015/16 will be above $6.00 (before retentions) down from 57% last week

Foreign Affairs/Constitution:

Next UK Parliament expected to consist of:

o Conservatives 38.0% of seats in the House of Commons (down from 38.9% last week)

o Labour 35.4% of seats (up from 35.3%)

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

o UKIP and similar 6.0% of seats (steady)

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

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 (up from 2.0%)

o All others 2.2% of seats (steady)

• David Cameron expected to be prime minister after next UK election (65% probability, up from 57% last week)

Boris Johnson expected to be elected to UK House of Commons this year (91% probability, down from 92%)

• Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (71% probability, up from 60% last week)

• All Eurozone countries, including Greece, expected to remain in Euro in 2015 (16% probability of an announcement of a departure this year, steady compared with last week)

• New South Wales Liberal/National Coalition expected to win most seats in NSW state election (92% probability, steady compared with 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, steady compared with last week) but be replaced as leader of the Australian Liberal Party by nomination day (50% probability Malcolm Turnbull will be leader on that day, down from 56% last week)

Bill Shorten expected to be Labor leader at next Australian federal election (87% 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 (44% probability, steady compared with last week). Jeb Bush has a 45% probability of being the Republican nominee (up from 39% last week) followed by Scott Walker (19% probability, down from 22%)

• There is only a 20% probability New Zealand will sign the Trans-Pacific Partnership this year (down from 31% last week), and theTrans-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 23% (down from 29% last week)

• There is a 10% probability New Zealand will become a republic by 2020 (up from 9% last week)

• Ireland to vote in favour of same-sex marriage before July 2015 (95% probability, down from 97% last week)

• There is an 18% probability Kim Jong-Un will cease being leader of North Korea before 2017 (down from 22% last week)


• 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 11.28 am today.


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