Outlook for 2011-15

• On the surface, the prospects for political stability are currently better than they have been for many months, thanks to the emergence in April of a relatively broad-based ruling coalition.
• Inter-party relations remain volatile, and much political conflict during the forecast period will remain highly personalised. Prospects for a significant and sustained improvement in political effectiveness are therefore remote.
• The circumstances surrounding the killing of a terrorist leader, Osama bin Laden, have tarnished the previously sterling reputation of Pakistan's army, so that in the short term a military coup is now even less likely than before.
• The US will remain Pakistan's most important donor and strategic partner. But the bilateral relationship is complex and subject to strain, and tensions will rise even further in the coming months in the wake of Mr bin Laden's death.
• Further disbursements from the emergency standby agreement with the IMF may be in jeopardy because of the Pakistani government's repeated failure to implement structural economic reforms mandated by the Fund.
• Real GDP growth in fiscal year 2010/11 (July-June) will be constrained by power shortages and the effects of floods. Growth will quicken to an average annual rate of 3.7% in 2011/12-2014/15, from an estimated 2.3% in 2010/11.

Monthly review

• On May 2nd US special forces killed Mr bin Laden, whose compound had been discovered to be located in Abbottabad, a town close to the Pakistani capital, Islamabad, and home to the country's premier military academy.
• In early May the government announced that the Pakistan Muslim League (Quaid-i-Azam), or PML (Q)-the party that had supported the previous president, Pervez Musharraf-would join the government.
• Following the decision by the PML (Q) to join the government, the Muttahida Qaumi Movement, which had been in the ruling coalition until leaving in January 2011, agreed to become part of a broader coalition.
• In late April the recently formed Pakistan Business Council, which is made up of representatives of large companies, presented a road map to try to revive the country's moribund economy.
• Remittances from overseas workers reached a new record level of US$1.1bn in March. Rising remittances enabled Pakistan to record a current-account surplus of US$99m in the first nine months of 2010/11.