Sir Michael Somare has retained the premiership in Papua New Guinea (PNG), following the country’s seventh general election, held in June-July 2007. The new government is another unwieldy coalition, although by virtue of the grace period during which no-confidence votes are not allowed, it will be in office at least until early 2009. Relations with Australia will continue to be tense, particularly as Sir Michael (whose relationship with the Australian government has been poor in recent years) will remain in office. The economic outlook is fairly bright, with the government likely to adhere to a prudent fiscal policy and economic growth remaining buoyant. Inflation should remain in single digits. Global prices for PNG's main exports will drop back in 2008-09, resulting in a deterioration in the current account.