New Zealand will get its youngest prime minister in more than 150 years after the small, nationalist New Zealand First Party agreed to form a new government with Labour Party leader Jacinda Ardern, ending the National Party’s decade in power.
The outcome caps a remarkable rise for Ardern, 37, who only took over the party’s top job in August, and marks another victory for a youthful global leader promising change, with big implications for the world’s 11th most traded currency, the central bank, immigration and foreign investment.
Labour had an even chance as National to form a government after inconclusive elections on Sept. 23 gave neither party enough seats to form a majority in parliament.
“Their tighter immigration proposals and more restrictive housing policy all suggest economic growth could be a little bit weaker than the Nationals’ policy,” Paul Dales, chief Australia and New Zealand economist at Capital Economics, said of Labour.
“The chances of a sharper slowdown are higher under Labour.”
The announcement of the new government drove the New Zealand dollar down around 1.7 percent to its lowest levels in four and half months, as markets worried about more protectionist policies to come.