IPREDICT LTD

NEW ZEALAND WEEKLY ECONOMIC & POLITICAL UPDATE

Monday 6 October 2014

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

www.electionresults.co.nz

Close Race Between Robertson & Little for Labour Leadership

Labour’s leadership race has closed up, with Grant Robertson now on 34% probability of winning the job followed by Andrew Little on 30%, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. David Cunliffe has a 21% probability of being Labour leader at the end of the year. Growth and interest-rate expectations have eased marginally since last week, but the forecast 2014/15 fiscal surplus and September quarter current account deficit have both improved fractionally. New Zealand is now expected to be elected to the UN Security Council but there is very little chance the Trans-Pacific Partnership will be ratified by the US Congress by mid-2017. Judith Collins is expected to return as a Cabinet minister before the next election, which is strongly expected to be in 2017 and narrowly expected to be won by National.

Politics:

• Winner of Labour primary expected to be (taking into account probability of Cunliffe departing permanently before the end of 2014):

o Grant Robertson 34% probability

o Andrew Little 30% probability

o David Cunliffe 21% probability

o Other 15% probability

• John Key expected to remain National leader until at least the end of 2016 (74% probability, up from 73% last week)

• Steven Joyce is favourite to become National Party leader if a vacancy arises, (34% probability, up from 27% last week), followed by Paula Bennett (32%, down from 33% last week), Jonathan Coleman (10%, up from 8%), Simon Bridges (8%, up from 7%) and Amy Adams (7%, up from 2%)

• Next election expected in 2017 (87% probability)

• National expected to win 2017 General Election (52% probability, steady)

• Judith Collins expected to be appointed a Cabinet minister before next general election (73% probability)

Economics:

• Quarterly GDP growth expected to be:

o 0.8% of GDP in the September quarter (down from 0.9% last week)

o 1.0% in the December quarter (steady)

o 1.0% in the March 2015 quarter (steady)

o 1.1% in the June 2015 quarter (steady)

• Unemployment expected to be 5.4% in September quarter (steady compared with last week) and 5.4% in the December quarter (steady)

• Current account deficit expected to be 3.4% of GDP in the September quarter (down from 3.5% last week) and 4.0% of GDP in the December quarter (steady)

• Annual inflation expected to be:

o 1.3% to end of September quarter (steady compared with last week)

o 1.6% to end of December quarter (steady)

o 1.9% to end of March 2015 quarter (steady)

o 2.2% to end of June 2015 quarter (steady)

• Official Cash Rate priced to be:

o 3.502% on 30 October (steady compared with last week)

o 3.520% on 11 December (down from 3.522%)

o 3.550% on 29 January (down from 3.556%)

o 3.627% on 12 March (down from 3.633%)

o 3.719% on 30 April (down from 3.746%)

o 3.836% on 11 June (down from 3.872%)

• Fiscal surplus expected to be:

o 0.18% of GDP in 2014/15 (up from 0.11% last week)

o 0.95% of GDP in 2015/16 (steady)

o 1.98% of GDP in 2016/17 (steady)

o 2.37% of GDP in 2017/18 (steady)

Foreign Affairs/Constitution:

• New Zealand expected to be elected to the UN Security Council (60% probability, up from 43% last week), but Helen Clark is not expected to be the next UN Secretary General (only 21% probability, down from 26% last week)

• There is a 24% probability New Zealand and South Korea will sign a Free Trade Agreement by 1 December 2014 (down from 37% last week)

• The Trans-Pacific Partnership is not expected to be ratified by the US Congress before 1 July 2017 (20% probability it will be)

• There is a 21% probability New Zealand will become a republic by 2020 (down from 30% 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 3.37 pm today.

ENDS

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