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Groser Set for Washington as Hopes for TPP Fade



Thursday 9 April 2015




Trade Minister Tim Groser is set to become New Zealand’s next Ambassador to the United States as hopes of a successful outcome to the Trans-Pacific Partnership (TPP) negotiations fade, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. There is now only a 35% probability New Zealand will sign the TPP in 2015 and just a 29% probability it will be ratified by the US Congress before 1 July 2017. NZ First is expected to hold the balance of power after the next New Zealand general election and allow a National-led government to be formed. However, John Key is not expected to remain prime minister through to the end of 2017 with Paula Bennett favoured to replace him, well ahead of Steven Joyce and Simon Bridges. Expectations for the Official Cash Rate and the Fonterra’s next two payouts have eased. In the United Kingdom, the UK Independence Party is no longer expected to hold a significant number of seats in the House of Commons after next month’s general election, at which the Conservatives’ David Cameron is expected to win a second term.

New Zealand Politics:

John Key is expected to remain National leader until at least the end of 2016 (85% probability, up from 79% last week) but has just a 25% probability of remaining National leader until at least the end of 2017 (up from 23% last week). Mr Key has a 73% probability of being National leader on Nomination Day before the next General Election (steady compared with last week)

Andrew Little is expected to remain Labour leader until at least the end of 2016 (95% probability, steady compared with last week) and has a 68% probability of remaining Labour leader until the end of 2017 (steady). Mr Little has a 90% probability of being Labour leader on Nomination Day before the next General Election (up from 90% last week)

• Paula Bennett remains the clear favourite to become National Party leader if a vacancy arises (37%, up from 35% last week), followed by Steven Joyce (10%, down from 13%) and Simon Bridges (10%, up from 6%)

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

• Kevin Hague remains strongly expected to be the next co-leader of the Green Party (80% probability, down from 82% last week), followed by James Shaw on 18% (up from 14%)

Judith Collins is not expected to be appointed to Cabinet before next election (only 49% probability she will be, down from 55% last week)

• Tim Groser is expected to be New Zealand’s next Ambassador to the United States (85% probability) and Maureen Pugh is expected to become eligible to be a list MP before the next election (73% probability)

Next election expected in 2017 (92% probability, steady compared with last week) with aturnout of 75%

• Forecast party vote shares at next election:

o National 43.7% (down from 44.2% last week)

o Labour 33.1% (up from 32.8%)

o Greens 10.9% (down from 11.0%)

o NZ First 7.3% (up from 7.2%)

o Others 5.1% (up from 4.8%)

• NZ First has a 68% probability of holding the balance of power after the next election. If NZ First does hold the balance of power, there is a 49% probability it will back National on confidence and supply and a 32% probability it will back Labour on confidence and supply (new stocks)

• National narrowly expected to form a government after 2017 General Election (54% probability, up from 53% last week)

• Almost no chance Wellington councils will be amalgamated by end of 2015 (only 5% probability they will be, down from 7% last week)

New Zealand Economics:

• Fruit-fly outbreak expected to be contained with fewer than 20 Queensland fruit-fliesexpected to be found in New Zealand as part of current outbreak (85% probability, up from 82% last week)

• New Zealand dollar expected to reach parity with Australian dollar by the end of 2015 (73% probability, up from 55% last week), with a 62% probability if will do so before July 2015 (up from 20% probability last week)

• Quarterly GDP growth expected to be:

o 0.75% in the March quarter (steady compared with last week)

o 1.10% in the June quarter (steady)

o 1.10% in the September quarter (steady)

o 1.10% in the December quarter (steady)

• Annual growth expected to be 4.12% in the 2015 calendar year (steady compared with last week)

• Unemployment expected to be:

o 5.41% in the March quarter (steady compared with last week)

o 5.29% in the June quarter (steady)

o 5.25% in the September quarter (steady)

o 5.30% in the December quarter (steady)

• Current account deficit expected to be:

o 3.61% of GDP in the March quarter (steady compared with last week)

o 3.56% in the June quarter (steady)

o 3.39% in the September quarter (steady)

o 3.49% in the December quarter (new stocks)

• Annual inflation expected to be:

o 0.24% to end of March 2015 quarter (down from 0.30% last week)

o 0.40% to end of June 2015 quarter (steady)

o 0.59% to end of September 2015 quarter (steady)

o 1.05% to end of December 2015 quarter (steady)

• Official Cash Rate priced to be:

o 3.480% on 30 April (down from 3.488% last week)

o 3.452% on 11 June (down from 4.75% last week)

o 3.427% on 23 July (down from 3.458%)

o 3.377% on 10 September (down from 3.424%)

o 3.358% on 29 October (down from 3.405%)

o 3.329% on 10 December (down from 3.387%)

o 3.319% on 28 January 2016 (down from 3.377%)

o 3.316% on 10 March 2016 (down from 3.374%)

o 3.306% on 28 April 2016 (down from 3.364%)

o 3.296% on 9 June 2016 (down from 3.354%)

• This implies the OCR is more likely than not to be cut on 29 October 2015 to 3.25% (compared with 28 January 2016 last week) and to remain at that rate until at least 9 June 2016 (steady)

• 23% probability of a fiscal surplus in 2014/15 (down from 28% last week)

• Fiscal balance expected to be:

o -0.19% of GDP in 2014/15 (down from -0.14% 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 $4.71 in 2014/15 (down from $4.79 last week)

o $5.62 in 2015/16 (down from $5.86)

o $6.43 in 2016/17 (steady)

• Stocks on tourism arrivals and gender and ethnic pay gaps have been launched this week.

Foreign Affairs/Constitution:

Next UK Parliament expected to consist of:

o Conservatives 43.2% of seats in the House of Commons (up from 37.9% last week)

o Labour 40.2% of seats (up from 35.3%)

o Nationalist parties 7.5% of seats (up from 7.1%)

o Liberal Democrats 4.1% of seats (down from 5.2%)

o UKIP and similar 1.0% of seats (down from 6.0%)

o Unionist parties 1.0% of seats (down from 2.2%)

o Green and similar 1.0% of seats (down from 2.1%)

o Independents and Speaker 1.0% of seats (down from 2.1%)

o All others 1.0% of seats (down from 2.2%)

• David Cameron expected to be prime minister after next UK election (57% probability, down from 58% last week)

Boris Johnson expected to be elected to UK House of Commons this year (99% probability, up from 91% last week)

• Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (73% probability, down from 75% last week)

• All Eurozone countries, including Greece, expected to remain in Euro in 2015 (20% probability of an announcement of a departure this year, down from 21% last week)

• Tony Abbott expected to remain leader of the Australian Liberal Party until 1 July 2015(only 18% probability of departing before then, down from 23% last week) but be replaced asleader of the Australian Liberal Party by nomination day (50% probability Malcolm Turnbull will be leader on that day, down from 53% last week)

Bill Shorten expected to be Labor leader at next Australian Federal election (86% probability, steady compared with 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 (50% probability, up from 49% last week). Jeb Bush has a 39% probability of being the Republican nominee down from 45% last week) followed by Scott Walker (21% probability, up from 20%) and Rand Paul (18% probability)

• There is a 38% probability New Zealand will sign the Trans-Pacific Partnership this year(down from 48% last week), but the Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 29% probability it will be, down from 33% last week)

• Helen Clark’s prospects of being the next UN Secretary General are 26% (up from 25% 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)


• 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 2.02 pm today.


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