The lack of a lasting political settlement covering most of the central and southern parts of the country will translate into negligible progress towards economic normalisation in 2011-12, as the outlook for continued civil conflict will carry a heavy toll. Failure of the 2010 secondary deyr rainy season in most parts of the country means that the humanitarian situation will deteriorate further, pushing the number of Somalis dependent on humanitarian emergency assistance over the 2m mark. Because of continuing insecurity, large-scale theft by contractors, distributors and armed groups, and the refusal of al-Shabab to tolerate foreign humanitarian agencies, the supply of aid will remain extremely difficult.

Remittances from the Somali diaspora are forecast to increase in 2011-12 from already high levels of around US$1bn a year, in line with global economic growth and improvements in money transfer technology, which should alleviate hardship in recipient households to a limited extent. Increased development assistance from the US will start to materialise in Puntland. The region will also benefit from recent oil exploration agreements, but uncertainty over the regional government's authority to strike such deals will continue to deter all but the most intrepid investors.