IPREDICT LTD

New Zealand Weekly Economic & Political Update

Monday 20 October 2014

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

LITTLE’S PROSPECTS STRENGTHEN; ARDERN EXPECTED TO BE DEPUTY

Andrew Little’s probability of being the next leader of the Labour Party has reached 70% and Jacinda Ardern is favourite to become his deputy, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. December GDP forecasts have eased slightly while the forecast September current account deficit continues to improve. Interest rate expectations have again fallen while the forecast fiscal surplus for 2014/15 has again disappeared. National is narrowly expected to win the next election, which is anticipated to be in 2017.

Politics:

• Next Labour Leader expected to be:

o Andrew Little 70% probability (up from 62% probability last week)

o Grant Robertson 21% probability (down from 22% last week)

o David Parker 8% probability (down from 11% last week)

o Nanaia Mahuta 0% probability (not reported last week)

• Next Labour Deputy Leader expected to be:

o Jacinda Ardern 53% probability (not reported last week)

o Grant Robertson 14% probability (not reported last week)

o Nanaia Mahuta 8% probability (not reported last week)

o Annette King 8% probability (not reported last week)

o Andrew Little 6% probability (not reported last week)

o David Parker 5% probability (not reported last week)

o David Shearer 2% probability (not reported last week)

o Stuart Nash 2% probability (not reported last week)

o Other 2% probability (not reported last week)

• John Key expected to remain National leader until at least the end of 2016 (73% probability, up from 69% last week) and has a 48% probability of remaining National leader until at least the end of 2017 (down from 49% last week)

• Steven Joyce is favourite to become National Party leader if a vacancy arises, (34% probability, down from 39% last week), followed by Paula Bennett (28%, down from 29% last week), Bill English (9%, up from 5% last week) and Simon Bridges (7%, down from 8% last week)

• Next election expected in 2017 (92% probability, steady compared with last week)

• National expected to win 2017 General Election (53% probability, steady)

Economics:

• Quarterly GDP growth expected to be:

o 0.8% of GDP in the September quarter (steady compared with last week)

o 0.9% in the December quarter (down from 1.0% last week)

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 5.5% in the December quarter (steady)

• Current account deficit expected to be 3.0% of GDP in the September quarter (down from 3.2% last week) and 4.0% of GDP in the December quarter (steady)

• Annual inflation expected to be:

o 1.2% to end of September quarter (steady compared with last week)

o 1.4% to end of December quarter (steady)

o 1.8% to end of March 2015 quarter (steady)

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

• Official Cash Rate priced to be:

o 3.503% on 30 October (up from 3.500% last week)

o 3.512% on 11 December (up from 3.509%)

o 3.527% on 29 January (steady)

o 3.583% on 12 March (down from 3.599%)

o 3.661% on 30 April (down from 3.691%)

o 3.770% on 11 June (down from 3.817%)

• Fiscal surplus expected to be:

o 0.02% of GDP in 2014/15 (down from 0.08% 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:

• As forecast by iPredict, New Zealand won a seat on the United Nations’ Security Council last week.

• There is a 29% probability New Zealand and South Korea will sign a Free Trade Agreement by 1 December 2014 (down from 33% last week)

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

• Helen Clark not expected to be the next UN Secretary General (only 29% probability, up from 20% last week)

• There is a 21% probability New Zealand will become a republic by 2020 (steady)

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 2.02 pm today.

ENDS

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