Despite winning a vote of confidence in the House of Assembly in June, the premier, Ewart Brown, of the governing nationalist Progressive Labour Party (PLP), will continue to be tested by dissident PLP members pushing for his early replacement. Given the likelihood of a prolonged period of weakness in the economy, Mr Brown will struggle to raise his poor level of support among voters. However, he now looks set to serve until at least October 2010. Bermuda’s economy is highly exposed, both to the fallout from global financial market stresses and the US recession, suggesting a poor outlook for growth. The Economist Intelligence Unit now envisages a 2% contraction of real GDP in 2009, before a weak recovery in 2010, assisted by a mild global rebound. Risks to this forecast appear weighted to the upside should improvements in risk appetite and global markets consolidate and provide a lift to international business activity. Inflation will remain subdued over the forecast period and we do not expect financing difficulties, despite rising debt levels. Recessionary forces will support the current-account balance, which will stay in surplus over the forecast period.