Abbott Expected to Be Replaced by Turnbull by Next Election

Abbott Expected to Be Replaced by Turnbull by Next Election

Embattled Australian Prime Minister Tony Abbott will be replaced by Malcolm Turnbull as federal leader of the Australian Liberal Party before the next federal election, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. The Liberal/National coalition is then expected to lead the next Australian government, although by just a whisker. In New Zealand, Prime Minister John Key appears unaffected by this week’s Mike Sabin allegations and remains expected to lead his National Party into the next election, which continues to be expected to be won by National. In economics, New Zealand’s growth and inflation forecasts have slipped marginally and a cut to the Official Cash Rate is now more likely than not by10 September.

Economics:

• Quarterly GDP growth expected to be:

o 0.8% in the December 2014 quarter (down from 0.9% last week)

o 0.6% in the March quarter (down from 0.7%)

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 (down from 4.1% last week)

• Unemployment expected to be:

o 5.3% in the December 2014 quarter (steady compared with last week)

o 5.3% in the March quarter (steady)

o 5.2% 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 3.4% of GDP in the December quarter (steady compared with last week) and 3.3% in theMarch quarter (new stocks)

• Annual inflation expected to be:

o 0.3% to end of March 2015 quarter (down from 0.5% last week)

o 0.6% to end of June 2015 quarter (down from 0.7%)

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 3.475% on 12 March (down from 3.485%)

o 3.457% on 30 April (down from 3.467%)

o 3.420% on 11 June (down from 3.451%)

o 3.389% on 23 July (down from 3.435%)

o 3.363% on 10 September (down from 3.429%)

o 3.347% on 29 October (down from 3.423%)

o 3.352% on 10 December 2015 (down from 3.433%)

o This implies a rate cut is more likely than not by 10 September

o OCR stocks out to June 2016 will be launched in the near future

• Only 14% probability of a fiscal surplus in 2014/15 (up from 13% last week)

• Fiscal balance expected to be:

o -0.23% of GDP in 2014/15 (steady compared with last week)

o 0.84% of GDP in 2015/16 (steady)

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

o 2.40% of GDP in 2017/18 (down from 2.41%)

Politics:

• John Key is expected to remain National leader until at least the end of 2016 (79% probability, down from 80% last week) and has a 49% probability of remaining National leader until at least the end of 2017 (steady)

• Paula Bennett returns as favourite to become National Party leader if a vacancy arises (26% probability, steady compared with last week), followed by Steven Joyce (25%, down from 28%) and Jonathan Coleman (10%)

• 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 (67% probability, up from 65% last week)

• Next election expected in 2017 (93% probability, steady compared with last week)

• Forecast party vote shares at next election:

o National 45.3% (down from 45.4% last week)

o Labour 31.9% (up from 31.8%)

o Greens 11.1% (down from 11.2%)

o NZ First 7.0% (steady)

o Others 4.6% (up from 4.3%)

• National expected to win 2017 General Election (54% probability, down from 55% last week)

Foreign Affairs/Constitution:

• Next UK Parliament expected to consist of:

o Labour 38.5% of seats in the House of Commons (down from 40.8% last week)

o Conservatives 38.0% of seats (up from 37.9%)

o UKIP and similar 6.0% of seats (steady)

o Liberal Democrats 5.1% of seats (steady)

o Nationalist parties 4.2% of seats (up from 1.9%)

o Unionist parties 2.1% of seats (down from 2.2%)

o Independents and Speaker 2.0% of seats (steady)

o Green and similar 2.0% of seats (steady)

o All others 2.1% of seats (steady)

• David Cameron expected to be prime minister after next UK election (70% probability, up from 57% last week)

• Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (53% probability)

• Tony Abbott expected to be replaced by Malcolm Turnbull as leader of the Australian Liberal Party by nomination day

• Liberals are narrowly expected to win the next Australian Federal election in 2016 (50% probability, down from 53% last week – Labor is on 48% probability)

• 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 39% probability of being the Republican nominee

• 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% (steady)

• There is an 18% 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 atwww.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 3.00 pm today.

ENDS