Thursday 26 February 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) 


·       iPredict Ltd is owned by Victoria University of Wellington.  Details on the company and its stocks can be found at

·       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. 

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Selwyn Manning, BCS (Hons.) MCS (Hons.) is an investigative political journalist with 23 years media experience. He specializes in reportage and analysis of socioeconomics, politics, foreign affairs, and security/intelligence issues. Selwyn has extensive experience as a commentator and has provided live political analysis to a wide range of television and radio organizations broadcasting in New Zealand, Australia and globally including the BBC (Five Live, London) and BBC (World Service). He is currently a correspondent to Australia's FiveAA radio, and is a regular live-on-air panelist on Radio New Zealand's The Panel with broadcaster Jim Mora.