"This evening the NZ First party announced its intention to form the next Government with the New Zealand Labour Party. As things stand, Jacinda Ardern will be New Zealand’s next Prime Minister," notes Phil Borkin, Senior Economist at ANZ.
Key quotes:
"The agreement takes the form of a formal coalition between NZ First and Labour, with support from the Green Party on issues of confidence and supply. However, at the time of writing, we were still awaiting confirmation of the latter."
"Crucially, many policy details are still lacking, but they should become clearer over the coming days."
"Today’s announcement does create some additional uncertainty compared with the more status quo alternative, at a time when the economy was already facing some growth headwinds. However, that needs to be weighed against the prospects of fiscal policy set to turn more expansionary."
"While the NZD has initially weakened on today’s announcement, whether this move extends will depend critically on policy details that we don’t yet have."
"Once these details are known, we will assess whether any changes to our economic forecasts are necessary."
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