New Zealand's financial markets could slip if there is a change of government, but the real economic effects would take longer to show up, economists say.
Polling suggests National will be re-elected, but Westpac chief economist Dominick Stephens said markets were "poised" and not 100 per cent sure which way the election result would go on Saturday.
"If the National Government was retained there would not be much cause to change our forecasts," he said.
"In the financial markets, there would be a modest lift in the exchange rate and interest rates.
"A change of government would be a surprise to financial markets, which would react with uncertainty and fear of the unknown. That would weigh on markets' minds and we would see a drop in interest rates and the exchange rate.
"The most likely outcome is a National-led government, and our macro-economic forecasts are based on that outcome."
Stephens said a change of government would mean different economic policies, but the final policy mix would depend on which parties ended up as coalition partners.
ASB chief economist Nick Tuffley said the election was causing a degree of uncertainty for markets.
"Until there's some certainty one way or the other, there is the potential for volatility."
But Tuffley said that regardless of the election outcome, the New Zealand economy was likely to enjoy solid growth for a while, underpinned by the Canterbury rebuild.
"Governments at the margin can make a difference for the fundamentals we are going to keep growing at a reasonable pace," he said.
"The country will get on with doing what it does in the aftermath. The key thing will be when people get certainty on the election outcome and get back to business."
Berl chief economist Ganesh Nana said markets would probably be spooked by "scare stories" and fall in the short term if there was a change of government.
He said big policy shifts like Labour's proposed capital gains tax, changes to monetary policy and the Kiwibuild house-building programme, as well as the Greens' planned carbon tax, would take a while to bed in.
"There may be a negative response that impacts on the exchange rate or interest rates or share prices in the short term, but over the longer term, intelligent players will see that inevitably there will have to be a capital gains tax in New Zealand," he said.
"There's a hole in our tax system that will have to be filled eventually, and sooner or later we will have to build houses, whether through the government or the market mechanism."
Paul Bloxham, chief economist Australia and New Zealand for HSBC, said markets were nervous about Labour's "radical" monetary policy.
Labour plans to widen the Reserve Bank's mandate beyond inflation targeting and allow KiwiSaver contributions to be varied as a monetary policy tool.
"A change in government would make markets uncertain as to what the Reserve Bank would end up doing. There could be a noticeable amount of volatility," Bloxham said.
While he was sceptical about Labour's monetary policy, Bloxham said its capital gains tax proposal could be good for New Zealand's economy.
"A capital gains tax wouldn't be a bad idea in New Zealand," he said.
"There's a great deal of speculation and volatility in the housing market driven by investors."
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