iPredict Update: Key To Win Fourth Election But Hand Over To Bennett By End Of 2017

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New Zealand Weekly Economic and Political Update

www.ipredict.co.nz

KEY TO WIN FOURTH ELECTION BUT HAND OVER TO BENNETT BY END OF 2017

John Key is expected to win an historic fourth term but then hand over the prime ministership to Paula Bennett by the end of 2017, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict.  All current ministers expect trade minister Tim Groser are expected to remain ministers until the end of the year, with Murray McCully and Nick Smith currently the most vulnerable.  Judith Collins is expected to be re-appointed a minister before the next election.  Growth and unemployment forecasts have worsened and two cuts to the Official Cash Rate are expected by the end of the year.  Andrew Little appears safe as leader of the Labour Party. 

New Zealand Politics:

·       John Key is expected to remain National leader until the end of 2016 (89% probability, steady compared with last week) and has just a 69% probability of being National leader on Nomination Day (up from 48% last week).  Mr Key has just a 17% probability of remaining National leader until the end of 2017 (down from 19% last week)

·       Paula Bennett remains the favourite to become National Party leader if a vacancy arises (35%, down from 38% last week), followed by Judith Collins on 23% (up from 20%)

·       Andrew Little is expected to remain Labour leader until at least the end of 2016 (76% probability, up from 75% last week) and has a 77% probability of being Labour leader on Nomination Day (down from 79% last week).  Mr Little has a 54% probability of remaining Labour leader until the end of 2017 (down from 56% last week)

·       All ministers except Trade & Climate Change Minister Tim Groser are expected to remain ministers until the end of the year.  The most vulnerable are Murray McCully, with a 38% probability of departing as Foreign Minister this year, and Nick Smith, with a 31% probability of departing as a minister this year.

·       Judith Collins has a 35% probability of being appointed to Cabinet this year (down from 48% last week) and a 73% probability of being appointed before the next election (up from 62%)

·       Tim Groser is expected to be New Zealand’s next Ambassador to the United States (94% probability, up from 93% 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 (96% probability, up from 93% last week) as is Maurice Williamson (80% probability, up from 71%).  There is an 87% probability of a by-election in Mt Roskill before the next general election (up from 86% last week) and a 53% probability of a by-election in Pakuranga (steady)

·       Next general election expected in 2017 (95% probability, steady compared with last week) with a turnout of 75% (steady)

·       Forecast party vote shares at next election:

o   National                             44.5% (up from 44.4% last week)

o   Labour                               34.1% (down from 34.5%)

o   Greens                               11.1% (steady)

o   NZ First                                7.8% (down from 7.9%)

o   Others                                  2.6% (up from 2.2%)

·       NZ First has a 77% probability of holding the balance of power after the next election (up from 76% last week).  If NZ First does hold the balance of power, there is a 55% probability it will back National on confidence in supply (up from 50% last week), a 43% probability it will back Labour on confidence and supply (down from 50% last week) and a 2% probability it would sit on the crossbenches (up from 0%)

·       National prime minister expected after 2017 General Election (63% probability, up from 62% last week)

·       David Carter is expected to be New Zealand’s next High Commissioner to the United Kingdom (83% probability, steady compared last week) and Gerry Brownlee has a 71% probability of being the next New Zealand Speaker (steady compared with last week), ahead of Anne Tolley on 27% (steady) 

New Zealand Business & Economics:

·       Average Auckland house price expected to rise from $828,502 in May to:

o   $839,385 in June (up from $831,273 last week)

o   $842,140 in July (up from $834,990)

o   $847,900 in August (up from $840,440)

o   $850,860 in September (new stocks)

·       The average Auckland house price is expected to reach $1,000,000 in the second half of 2018 (55% probability, down from 62% last week)

·       Fonterra’s final payout (before retentions) expected to be:

o   $4.67 in 2014/15 (up from $4.65 last week)

o   $5.50 in 2015/16 (up from $5.41)

o   $5.97 in 2016/17 (down from $6.05)

o   $6.15 in 2017/18 (steady))

·       Quarterly GDP growth expected to be:

o   0.61% in the June quarter (down from 0.66% last week)

o   0.83% in the September quarter (down from 0.90%)

o   0.95% in the December quarter (down from 0.98%)

·       Annual growth expected to be 2.61% in the 2015 calendar year (down from 3.41% last week)

·       Unemployment expected to be:

o   5.54% in the June quarter (up from 5.51% last week)

o   5.42% in the September quarter (up from 5.40%)

o   5.37% in the December quarter (steady)

o   5.45% in the March 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   3.70% of GDP in the March quarter (up from 3.51% last week)

o   3.80% in the June quarter (up from 3.57%)

o   3.53% in the September quarter (up from 3.39%)

o   3.49% in the December quarter (steady)

·       Annual inflation expected to be:

o   0.44% to end of June 2015 quarter (down from 0.45% last week)

o   0.58% to end of September 2015 quarter (up from 0.50%)

o   0.92% to end of December 2015 quarter (up from 0.82%)

o   1.56% to end of March 2016 quarter (steady)

o   1.49% to end of June 2016 quarter (up from 1.47%)

o   1.50% to end of September 2016 quarter (steady)

o   1.52% to end of December 2016 quarter (steady)

·       Official Cash Rate priced to be:

o   3.070% on 23 July (down from 3.270% last week)

o   2.952% on 10 September (down from 3.194%)

o   2.909% on 29 October (down from 3.157%)

o   2.864% on 10 December (down from 3.111%)

o   2.854% on 28 January 2016 (down from 3.102%)

o   2.838% on 10 March 2016 (down from 3.081%)

o   2.828% on 28 April 2016 (down from 3.071%)

o   2.806% on 9 June 2016 (down from 3.058%)

·       This implies the OCR is more likely than not to be cut on 23 July 2015 to 3.00% and then to 2.75% on 10 December 2015

·       37% probability of a fiscal surplus in 2014/15 (up from 5% last week)

·       Fiscal balance expected to be:

o   -0.13% of GDP in 2014/15 (up from -0.32% last week)

o   0.21% of GDP in 2015/16 (up from 0.20%)

o   0.88% of GDP in 2016/17 (down from 1.26%)

o   1.89% of GDP in 2017/18 (down from 1.96%)

·       New Zealand dollar not expected to reach parity with Australian dollar by the end of 2015 (only 3.7% probability it will achieve parity, down from 13% last week)

·       Stocks on tourism arrivals are now available for trading

Foreign Affairs/Constitution:

·       Andy Burnham is favourite to be the next leader of the UK Labour Party (52% probability, steady compared with last week), ahead of Liz Kendall (23%, down from 32%) and Yvette Cooper (17%, up from 15%)

·       Boris Johnson has a 31% probability of being prime minister before 2020 (down from 35% last week)

·       UK expected to vote to stay in EU by end of 2018 (75% probability, steady compared with 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 (23% probability of an announcement of a departure this year, up from 21% last week).  There is only a 40% probability of a departure by the end of 2017 (up from 38% last week)

·       Tony Abbott is expected to be leader of the Australian Liberal Party on nomination day (69% probability, up from 63% last week) and Bill Shorten is expected to be Labor leader (81% probability, down from 90%)

·       Liberals ahead of Labor for next Australian Federal election in 2016 (69% probability of Liberal win, up from 63% 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 40% probability of being the Republican nominee (up from 33% last week) followed by Marco Rubio (23%, steady) and Scott Walker (22%, up from 20%)

·       There is only a 16% probability New Zealand will sign the Trans-Pacific Partnership this year (up from 9% last week), and the Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (only 40% probability it will be, down from 43% last week)

·       Helen Clark’s chances of being the next UN Secretary General are 25% (steady compared with last week)

·       There is a 10% probability New Zealand will become a republic by 2020 (steady compared with last week)

·       There is an 80% probability New Zealanders will vote to keep the current flag

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 1:59 pm 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.

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