There is little likelihood that the ruling Lao People's Revolutionary Party (LPRP) will face a serious challenge to its authority in the forecast period. A relative lack of exposure to global trade and investment flows protected the economy from the worst of the 2008-09 global financial crisis, ensuring that the government did not face significant protests by newly unemployed workers or greater agitation for democratic reform. This has made it easier for the LPRP to maintain its tight grip on power and control over society. In 2011-12 continued rapid economic growth and an extensive security apparatus will keep the LPRP's position secure.

The party has meanwhile managed a period of political change effectively. The LPRP's ninth party congress, which was held in mid-March, saw the traditional round of reshuffles in the politburo and central committee. The jockeying for position between different factions took place behind closed doors, and if any groups became disillusioned, their views were not made public. The resignation of the prime minister, Bouasone Bouphavanh, in December 2010 presaged a greater fall from grace-he lost his positions in the party's politburo and central committee at the congress, which will curtail his influence over his successor as prime minister, Thongsing Thammavong. A number of other resignations by senior members of the politburo have further cemented Thongsing's position. The parliamentary election held on April 30th was another success for the party, with the LPRP winning 128 of the 132 seats in the newly expanded parliament, and polling proceeding peacefully. The election of four non-party legislators, compared with two in the previous government, points to a desire for greater plurality among the electorate, but the Economist Intelligence Unit does not expect the government to repeal its ban on opposition parties in the forecast period.

The growth of an urban middle class and the awareness among provincial party members of an increasing gap between rural and urban incomes could put the LPRP under pressure in this parliamentary term, as could the unpopular practice of leasing land to foreign companies. Having imposed a two-year moratorium on the granting of such concessions in 2007, the government is again leasing out vast areas of land, much of it agricultural, for use in plantation, mining, logging and hydropower projects. Many villagers complain that they have been forced off land that their ancestors had worked for centuries. Protests so far have been small and isolated, but they could coalesce and escalate as more land is leased.

A recent acceleration in the rate of consumer price inflation has increased concerns about food security. The government is aware of the sensitivity of the Lao people to rising food prices, but has found itself unable to match rhetoric with action regarding plans to increase food production and protect arable land. Despite repeated calls to cease the conversion of farmland to other uses, the construction of residential and commercial property has continued on rice paddies in and near urban areas. Although investment in the road and railway network-most notably, the announcement of a US$7bn rail link to China-will help to reduce transport costs, the country's food output remains dependent on imported inputs, increasing its vulnerability to fluctuations in international commodity prices, which raises the potential for political unrest.

Despite these risks, our central forecast is that the LPRP will continue to exert full control. This means that it will lack the motivation to introduce a democratic political system. Bouasone permitted a degree of reform during his time as prime minister, but his departure has cast doubt on whether further steps will be taken in this direction. It remains to be seen whether the intensity of the government's crackdown on illegal mining and logging operations will be sustained, given that the previous prime minister was the driving force behind this campaign. Parliament has passed a law permitting the formation of civil-society organisations, thereby providing a legal framework for Lao citizens to organise groups independent of control by the LPRP, but such organisations are unlikely to voice overt criticism of the political system for fear of a government crackdown.

Despite continued ethnic tensions, there have been no recent reports of attacks by ethnic-Hmong rebels or other insurgents on government or civilian targets. The government will continue to face allegations of human-rights abuses until the Hmong issue is resolved. The treatment of more than 4,000 ethnic-Hmong refugees who were repatriated from camps in Thailand's Phetchabun and Nong Khai provinces in 2009 will continue to be closely monitored from abroad. The death in January 2011 of Vang Pao, the informal leader in the US of exiled Hmong, may take some of the sting out of the problematic relations between the LPRP and exiled Hmong dissidents.