The imminent addition of 4,000 extra Ugandan and Burundian troops to the African Union Mission in Somalia (Amisom) is likely to tilt the balance of power towards the forces loyal to the transitional federal government (TFG) and away from the main Islamist insurgent group, al-Shabab, at least around the capital, Mogadishu. However, the rebels are likely to hold on to most of the territory that they currently hold, which comprises over half the country, without a further increase in Amisom's numbers and firepower.

The lack of clarity about what will happen once the mandate of the TFG expires in August 2011 poses severe risks to political stability. The government's recent unilateral declaration of a one-year extension to its term is unlikely to receive the constitutionally required approval of the Federal Transitional Parliament (FTP), the speaker of which, Sharif Hasan Shaykh Adan, remains implacably opposed to the TFG's president, Sheikh Sharif Sheikh Ahmed. The TFG appears unwilling to revoke its self-granted extension, which could lead to a political stalemate that robs the country's dysfunctional transitional institutions of what little legitimacy they have. On balance, the Economist Intelligence Unit expects a face-saving compromise to be reached. The current transitional government will probably be reshuffled after August 2011, including the election of a new leader by the FTP (although this could prove to be a sticking point).

Foreign governments will continue to support the security forces loyal to the interim administration by providing money, training and materials. However, donors look set increasingly to adopt a "two-track" approach, engaging with both the TFG and any regional administrations deemed to be competent. If the transitional institutions in the capital, Mogadishu, are unable to improve their functioning and end in-fighting, this process will result in their increasing marginalisation by foreign powers. However, the TFG will resist this trend and will brandish the threat of Mogadishu falling entirely under Islamist control if donors cut off support. Thus, we expect donors to overcome their misgivings about the transitional institutions in order to avoid their total collapse.

Compounding an already dire security situation, the failure of the deyr rainy season (September-December), upon which most Somalis depend for farming and pastoralism, is set to increase food insecurity from already alarmingly high levels. The Islamists' refusal to allow foreign humanitarian agencies to operate in their territory will condemn many thousands to hunger. The number of internally displaced people is therefore set to increase, particularly in Mogadishu, where many pastoralists will flee in search of food, despite the high security risks.

Acts of piracy by Somalis off the Horn of Africa, including the hijacking of ships and the kidnapping of their crews for ransom, are likely to remain frequent throughout the forecast period, given the expected continuation of instability onshore. The greater focus of US policy towards Somalia on the semi-autonomous region of Puntland will mean more donor-backed efforts towards the development of viable alternative livelihoods for those currently engaged in piracy. However, a well-equipped and organised hard core will remain unwilling to forgo such a lucrative racket in favour of legitimate occupations such as fishing.