JOHN KEY TO QUIT BEFORE NEXT ELECTION
New Zealand will have a female National Party prime minister before the next general election, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. John Key is expected to quit as the party’s leader in 2017 before the start of the election campaign. Paula Bennett is the favourite to be replace him, with 37% probability, followed by Judith Collins on 19%. NZ First has a 66% probability of holding the balance of power after the next election and is expected to back National, which now has a 60% probability of leading the next government. The average Auckland house price is expected to reach $814,319 in May with the Official Cash Rate picked to be cut on or before 10 September. CPI forecasts are up marginally but inflation is still expected to remain below the Reserve Bank’s 2% midpoint target until the end of the June 2016 quarter. There is now almost no chance New Zealand will sign the Trans-Pacific Partnership in 2015. David Cameron is narrowly expected to remain UK prime minister after this week’s election. TV3’s Campbell Live is expected to survive 2015.
New Zealand Politics:
· John Key is expected to remain National leader until the end of 2016 (78% probability, down from 90% last week) but has just a 31% probability of being National leader on Nomination Day before the next General Election (down from 73% last week). Mr Key has just a 17% probability of remaining National leader until the end of 2017 (down from 35% last week).
· Paula Bennett remains the favourite to become National Party leader if a vacancy arises (37%, down from 44% last week), followed by Judith Collins on 19% (up from 5% last week).
· Andrew Little is expected to remain Labour leader until at least the end of 2016 (85% probability, up from 83% last week) and has an 85% probability of being Labour leader on Nomination Day before the next General Election (up from 73% last week). Mr Little has a 68% probability of remaining Labour leader until the end of 2017 (up from 64% last week).
· Stocks on who is favoured to become Labour Party leader if a vacancy arises will be launched in the near future
· Kevin Hague remains expected to be the next co-leader of the Green Party (60% probability, down from 78% last week), but James Shaw is catching up (40% probability, up from 21% last week).
· Judith Collins has a 55% probability of being appointed to Cabinet this year and a 67% probability of being appointed before the next election.
· Tim Groser is expected to be New Zealand’s next Ambassador to the United States (96% probability, steady compared with last week) and Maureen Pugh is expected to become eligible to be a list MP before the next election (95% probability, steady)
· Phil Goff is expected to stand for the Auckland mayoralty (93% probability, down from 94% last week)
· Next election expected in 2017 (92% probability, up from 91% last week) with a turnout of 75% (steady)
· Forecast party vote shares at next election:
o National 43.8% (steady compared with last week)
o Labour 32.8% (down from 33.1%)
o Greens 10.8% (steady)
o NZ First 7.5% (steady)
o Others 5.1% (up from 4.8%)
· NZ First has a 66% probability of holding the balance of power after the next election (down from 68% last week). If NZ First does hold the balance of power, there is a 54% probability it will back National on confidence and supply (up from 52% last week), a 30% probability it will back Labour on confidence and supply (down from 32%) and a 16% probability it would sit on the crossbenches (steady)
· National prime minister expected after 2017 General Election (60% probability, up from 58% last week)
· David Carter is expected to be New Zealand’s next High Commissioner to the United Kingdom (79% probability, steady compared with last week) and Gerry Brownlee has an 83% probability of being the next New Zealand Speaker (up from 62%)
· Almost no chance Wellington councils will be amalgamated by end of 2015 (only 5% probability they will be, steady compared with last week)
New Zealand Business & Economics:
· Fruit-fly outbreak expected to be contained with fewer than 20 Queensland fruit-flies expected to be found in New Zealand as part of current outbreak (94% probability, up from 92% last week)
· New Zealand dollar not expected to reach parity with Australian dollar by the end of 2015 (only 35% probability it will achieve parity, down from 82% last week)
· Average Auckland house price expected to be $814,319 in May 2015 (new stocks) up from $809,200 in April
· Quarterly GDP growth expected to be:
o 0.69% in the March quarter (down from 0.76% last week)
o 0.70% in the June quarter (up from 0.65%)
o 0.86% in the September quarter (steady)
o 0.89% in the December quarter (up from 0.85%)
· Annual growth expected to be 3.17% in the 2015 calendar year (up from 3.15% last week)
· Unemployment expected to be:
o 5.39% in the June quarter (up from 5.29% last week)
o 5.30% in the September quarter (up from 5.25%)
o 5.37% in the December quarter (steady)
· New Zealand pay gaps in 2014/15 expected to be:
o Gender 9.95% (steady compared with last week)
o Maori 12.28% (steady)
o Pacific 23.12% (steady)
o Asian 20.43% (steady)
· Current account deficit expected to be:
o 3.61% of GDP in the March quarter (steady compared with last week)
o 3.57% in the June quarter (up from 3.56% last week)
o 3.39% in the September quarter (steady)
o 3.49% in the December quarter (new stocks)
· Annual inflation expected to be:
o 0.38% to end of June 2015 quarter (up from 0.33% last week)
o 0.54% to end of September 2015 quarter (up from 0.52%)
o 0.80% to end of December 2015 quarter (down from 0.83%)
o 1.43% to end of March 2016 quarter (new stocks)
o 1.45% to end of June 2016 quarter (new stocks)
· Official Cash Rate priced to be:
o 3.455% on 11 June (down from 3.482% last week)
o 3.410% on 23 July (down from 3.457%)
o 3.362% on 10 September (down from 3.409%)
o 3.343% on 29 October (down from 3.391%)
o 3.300% on 10 December (down from 3.370%)
o 3.290% on 28 January 2016 (down from 3.360%)
o 3.269% on 10 March 2016 (down from 3.357%)
o 3.259% on 28 April 2016 (down from 3.347%)
o 3.247% on 9 June 2016 (down from 3.335%)
· This implies the OCR is more likely than not to be cut on 10 September 2015 to 3.25% (compared with 10 December 2015 last week) and to remain at that rate until at least 9 June 2016 (steady)
· Stocks on Australian interest rates are now available for trading
· 3% probability of a fiscal surplus in 2014/15 (down from 7% last week)
· Fiscal balance expected to be:
o -0.32% of GDP in 2014/15 (down from -0.29% last week)
o 0.53% of GDP in 2015/16 (down from 0.68%)
o 1.51% of GDP in 2016/17 (down from 1.79%)
o 1.80% of GDP in 2017/18 (down from 2.15%)
· Fonterra’s final payout (before retentions) expected to be:
o $4.64 in 2014/15 (down from $4.67 last week)
o $5.34 in 2015/16 (down from $5.35)
o $6.10 in 2016/17 (steady)
· Campbell Live not expected to be cancelled this year (only 25% probability it will be, down from 73% probability last week)
· Stocks on tourism arrivals are now available for trading
Foreign Affairs/Constitution:
· Next UK Parliament expected to consist of:
o Conservatives 43.0% of seats in the House of Commons (up from 42.6% last week)
o Labour 39.6% of seats (steady)
o Nationalist parties 7.8% of seats (down from 8.0%)
o Liberal Democrats 3.9% of seats (down from 4.0%)
o UKIP and similar 3.7% of seats (down from 3.8%)
o Unionist parties 1.1% of seats (up from 0.0%)
o Green and similar 1.0% of seats (steady)
o Independents and Speaker 0.0% of seats (down from 1.0%)
o All others 0.0% of seats (steady)
· David Cameron narrowly expected to be prime minister after next UK election (55% probability, up from 53% last week)
· Boris Johnson expected to be elected to UK House of Commons this year (99% probability, steady compared with last week) and has a 35% probability of being prime minister before 2020 (up from 30% last week)
· Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (67% probability, steady compared with last week)
· All Eurozone countries, including Greece, expected to remain in Euro in 2015 (22% probability of an announcement of a departure this year, up from 20% last week)
· Tony Abbott expected to remain leader of the Australian Liberal Party until 1 July 2015 (only 5% probability of departing before then, up from 2% last week) and favourite to be leader of the Australian Liberal Party on nomination day (42% probability, down from 53% last week)
· Bill Shorten expected to be Labor leader at next Australian Federal election (87% probability, down from 89% 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 (52% probability, down from from 54% last week). Jeb Bush has a 39% probability of being the Republican nominee (down from 40% last week) followed by Scott Walker (23% probability) and Marco Rubio (19% probability)
· There is only an 8% probability New Zealand will sign the Trans-Pacific Partnership this year (down from 21% last week), and the Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 38% probability it will be, steady)
· Helen Clark’s prospects of being the next UN Secretary General are 29% (down from 35% last week)
· There is a 10% probability New Zealand will become a republic by 2020 (steady compared with 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 11.00 am today.
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