Westpac On NZ Election

The Bank notes that it may time a number of weeks for the new coalition government to form, post the weekend's election result. However, they don't expect significant near term macro implications from the election outcome, see below more details.

• "Election night results from the 2023 General Election indicate that the centre-right parties of National and ACT won 61 seats. Importantly, once an estimated 563,000 special votes are counted, history suggests that National will drop 1-2 seats to the centre-left grouping.
• As a result, when all said and done, National and ACT are likely to finish with 60 or 61 seats in the new parliament – insufficient to command a majority. Hence the support of the NZ First Party will likely be needed to achieve a working majority.
• The outcome of special votes and hence the official result will not be known until November 3 which will likely delay substantive coalition negotiations.
• Comments from the centre-right leaders suggest constructive coalition negotiations. National and ACT appear interested in dealing with NZ First, and NZ First have indicated an interest in helping National/ACT– although the details will matter.
• Financial market volatility may be slightly elevated as coalition negotiations evolve. However, centre-right’s strong performance on the night will help to assuage some uncertainty.
• We don’t think there are significant short term macro implications from the election outcome.
• We generally see coalition negotiations as pulling National towards a more contractionary stance as both potential partners advocate for greater fiscal restraint."