Political clashes and social unrest are expected to escalate in coming months, owing to growing difficulties faced by the elected constituent assembly in reaching consensus on polemical issues before a mid-December deadline. The president, Evo Morales of the Movimiento al Socialismo (MAS), who hopes to get enough support to end a ban on consecutive re-election to enable him to stand again, will continue to seek a compromise. Nevertheless, there is a high risk that the constitutional reform will fail. The Economist Intelligence Unit expects Mr Morales to serve out his mandate, but governability will be weak. Fiscal policy will become more expansionary and the fiscal balance will move to a deficit of 1.4% of GDP in 2008 and 2.8% of GDP in 2009. Real GDP growth will average 4.1% in the forecast period, mainly sustained by domestic demand, although real exports will gradually recover from the contraction in 2007. Year-end inflation is expected to decline to 7% in 2008 and 5% in 2009, from an estimated 10.8% in 2007. The exchange rate will appreciate moderately in real terms, supported by a large trade surplus and booming workers' remittances, which will also underpin a wide current-account surplus.