MIL OSI –
KIWI DOLLAR TO REACH PARITY WITH AUSSIE DOLLAR IN 2015
The New Zealand dollar will reach parity with the Australian dollar in 2015 and there is just over a 50% probability it will do so by the end of June, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. It is again more likely than not there will be a cut in the New Zealand Official Cash Rate in 2015. Greece is now more strongly expected to stay in the Euro through 2015. The next Australian Federal Election is 50:50, but is expected to be between Labor’s Bill Shorten and the Liberals’ Malcolm Turnbull. Winston Peters is not expected to stand in the Northland by-election, which is strongly expected to be won by National. Kevin Hague is overwhelmingly picked to be the next male co-leader of the New Zealand Greens.
Northland By-election:
· Winston Peters is not expected to be the NZ First candidate for the Northland by-election (only a 40% probability he will be, up from 33% last week)
· Labour candidate expected to win more than 25.89% of the vote in the Northland by-election (60% probability Labour will beat this score, down from 87% last week)
· Coin toss over whether National candidate will win more than 50% of the vote in the Northland by-election (50% probability National candidate will beat this score, down from 70% last week)
· Only 5% probability a candidate from other National or Labour will win Northland by-election (down from 5% last week)
New Zealand Politics:
· Kevin Hague overwhelmingly favoured to be next Green Party co-leader (95% probability)
· John Key is expected to remain National leader until at least the end of 2016 (80% probability, up from 79% last week) and has a 49% probability of remaining National leader until at least the end of 2017 (steady compared with last week)
· Steven Joyce remains favourite to become National Party leader if a vacancy arises (29%, up from 27% last week), followed by Paula Bennett (26%, up from 24%) and Amy Adams (12%, up from 11%)
· 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 (60% probability, down from 62% 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% (up from 32.0%)
o Greens 11.1% (steady)
o NZ First 6.9% (steady)
o Others 4.7% (down from 4.8%)
· National expected to win 2017 General Election (55% probability, down from 57% last week)
· Wellington councils not expected to be amalgamated by end of 2015 (only 43% probability they will be)
New Zealand Economics:
· New Zealand dollar expected to reach parity with Australian dollar by the end of 2015 (75% probability) and may reach parity by end of June 2015 (53% probability)
· 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 (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 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 (up from 3.491%)
o 3.488% on 30 April (up from 3.486%)
o 3.450% on 11 June (down from 3.451%)
o 3.424% on 23 July (up from 3.421%)
o 3.386% on 10 September (down from 3.395%)
o 3.367% on 29 October (down from 3.376%)
o 3.372% on 10 December 2015 (down from 3.380%)
o This implies the OCR is more likely than not to be cut on 29 October (compared with it being more likely than not to remain at 3.50% throughout the calendar year last week)
o OCR stocks out to June 2016 will be launched in the near future
· Only 17% probability of a fiscal surplus in 2014/15 (down from 18% last week)
· Fiscal balance expected to be:
o -0.17% of GDP in 2014/15 (steady compared with last week)
o 0.85% of GDP in 2015/16 (up from 0.75%)
o 1.98% of GDP in 2016/17 (steady)
o 2.38% of GDP in 2017/18 (steady)
· There is only a 55% probability Fonterra’s payout in 2015/16 will be above $6.00 (before retentions)
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 37.1% of seats (steady)
o Nationalist parties 6.6% of seats (steady)
o UKIP and similar 5.7% of seats (steady)
o Liberal Democrats 4.9% of seats (steady)
o Unionist parties 2.1% of seats (steady
o Green and similar 1.9% of seats (steady)
o Independents and Speaker 1.9% of seats (steady)
o All others 2.0% of seats (steady)
· David Cameron expected to be prime minister after next UK election (57% probability, up from 55% last week)
· Boris Johnson expected to be elected to UK House of Commons this year (92% probability, down from 95% last week)
· 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 (only 13% probability of an announcement of a departure this year, down from 29% 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, up from 20% last week) but be replaced by Malcolm Turnbull as leader of the Australian Liberal Party by nomination day (69% probability Turnbull will be leader on that day, up from 60% last week)
· Bill Shorten expected to be Labor leader at next Australian federal election (90% probability)
· Coin toss between Liberals and Labor for next Australian Federal election in 2016 (both on 50%, 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 (48% probability, up form 46% last week). Jeb Bush has a 39% probability of being the Republican nominee (steady compared with last week) followed by Scott Walker (20% probability, down from 25% last week)
· There is only a 31% probability New Zealand will sign the Trans-Pacific Partnership this year (up from 25% 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 25% (down from 27% last week)
· There is a 13% probability New Zealand will become a republic by 2020 (down from 15% last week)
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 10.46 am today.
150226-1046-Economic-and-Political-Update-FINAL.pdf
