The positive political outlook, expected increase in agriculture production following
the favorable monsoon, modest improvement in capital expenditure following the timely full
FY2014 budget, and a strong services sector performance supported by remittance income are
expected to boost gross domestic product (GDP) growth (at basic prices) to 4.5% in FY2014,
up from 3.6% in FY2013. The forecast is lower than the government’s 5.5% target in view
of the less than expected increase in capital spending and a slightly lower services sector. In
addition to the improvements in agriculture production, both domestic and foreign investment
commitments increased remarkably in the first half of FY2014.