iPredict Ltd New Zealand Weekly Economic & Political Update

Tuesday 10 February 2015

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

Greece Expected to Remain in Euro This Year

There will be no announcement of a Greek exit from the Eurozone in 2015, according to the combined wisdom of the 8000+ registered traders on New Zealand’s predictions market, iPredict. In the UK, the Conservatives are expected to be returned to power in May while, in Spain, the Socialist Workers’ Party is expected to oust the People’s Party in December. Closer to home, AustralianPrime Minister Tony Abbott appears safe until the middle of the year as leader of the Liberal Party but Malcolm Turnbull is expected to lead the party into the next election, which is too close to call. In New Zealand, Prime Minister John Key’s position has strengthened despite a marginal increase in short-term unemployment forecasts and a small weakening in the fiscal outlook. Hillary Clinton continues to have a 50% probability of being elected President of the United States in 2016.

NZ Economics:

• Quarterly GDP growth expected to be:

o 0.6% in the March quarter (steady compared with last week)

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 (steady compared with last week)

• Unemployment expected to be:

o 5.4% in the March quarter (up from 5.3% last week)

o 5.3% in the June quarter (up from 5.2%)

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 3.4% in theMarch quarter (up from 3.3%)

• Annual inflation expected to be:

o 0.1% to end of March 2015 quarter (down from 0.3% last week)

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

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 3.485% on 12 March (up from 3.475%)

o 3.470% on 30 April (up from 3.457%)

o 3.427% on 11 June (up from 3.420%)

o 3.397% on 23 July (up from 3.389%)

o 3.371% on 10 September (up from 3.363%)

o 3.355% on 29 October (up from 3.347%)

o 3.359% on 10 December 2015 (up from 3.353%)

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

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

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

• Fiscal balance expected to be:

o -0.26% of GDP in 2014/15 (down from -0.23% last week)

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

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

o 2.39% of GDP in 2017/18 (down from 2.40%)

Politics:

• John Key is expected to remain National leader until at least the end of 2016 (81% probability, up from 79% last week) and has a 50% probability of remaining National leader until at least the end of 2017 (up from 49%)

• 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 (24%, down from 25%) and Jonathan Coleman (11%, up from 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 (61% probability, down from 67% last week)

• Next election expected in 2017 (92% probability, down from 93% last week)

• Forecast party vote shares at next election:

o National 45.2% (down from 45.3% last week)

o Labour 31.9% (steady)

o Greens 11.1% (steady)

o NZ First 7.0% (steady)

o Others 4.8% (up from 4.6%)

• National expected to win 2017 General Election (57% probability, up from 54% last week)

Foreign Affairs/Constitution:

• Next UK Parliament expected to consist of:

o Labour 37.3% of seats in the House of Commons (down from 38.5% last week)

o Conservatives 37.0% of seats (down from 38.0%)

o Nationalist parties 6.9% of seats (up from 4.2%)

o UKIP and similar 5.7% of seats (down from 6.0%)

o Liberal Democrats 4.9% of seats (down from 5.1%)

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

o Green and similar 2.0% of seats (steady)

o Independents and Speaker 1.9% of seats (down from 2.0%)

o All others 2.1% of seats (steady)

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

• Socialist Workers’ Party expected to defeat People’s Party in next Spanish election (60% probability, up from 53% last week)

• All Eurozone countries, including Greece, expected to remain in Euro in 2015 (only 29% probability of an announcement of a departure this year)

• Tony Abbott is expected to remain leader of the Australian Liberal Party until 1 July 2015 (only 25% probability of departing before then) but be replaced by Malcolm Turnbull as leader of the Australian Liberal Party by nomination day (62% probability Turnbull will be leader on that day)

• Liberals and Labor neck and neck for next Australian Federal election in 2016 (both on 50%, compared with narrow advantage for Liberals 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, steady compared with last week). Jeb Bush has a 39% probability of being the Republican nominee (steady compared with last week)

• 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 27% (up from 25% last week)

• 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 1.50 pm today.

ENDS

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