Bangladesh Defense
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LDC graduation could cost Bangladesh $17.5b in exports: UNCTAD
Bangladesh could lose more than $17.5 billion in exports following its graduation from the least developed country (LDC) category, the steepest projected loss among all graduating nations globally, according to a new United Nations report.
LDC graduation could cost Bangladesh $17.5b in exports: UNCTAD
Mahmudul Hasan
Bangladesh could lose more than $17.5 billion in exports following its graduation from the least developed country (LDC) category, the steepest projected loss among all graduating nations globally, according to a new United Nations report.
The figure represents nearly a third of the country’s $54.8 billion in total exports recorded in 2023, according to the Trade Preferences Outlook 2025, published by the UN Conference on Trade and Development (UNCTAD).
“The trade effects of losing LDC preferences could be substantial in certain cases,” it said, projecting that Bangladesh can face a 32.24 percent decline in its total exports after it transitions to a developing country.
The warning comes just over six months before Bangladesh’s scheduled graduation on November 24, 2026. Nepal and Lao PDR are also scheduled to graduate this year, with the third and final review process by the UN currently underway ahead of the final transition.
The new BNP-led government, which took office in February, has sought a three-year deferral, pushing the graduation date to November 2029, citing disruptions in preparedness caused by prolonged global crises and domestic economic pressures.
The request came amid repeated calls from exporters who say the country is not yet prepared to compete without preferential trade access.
GARMENTS, FOOTWEAR TO BEAR THE BRUNT
The UNCTAD report, released in late February, found that around 97 percent of the projected export losses would stem from the apparel and footwear sectors – the twin pillars of Bangladesh’s export economy, which together account for nearly 90 percent of the country’s goods exports.
The European Union (EU) looms largest in the risk picture. Some 77 percent of the total projected loss is linked to preference erosion in the EU market, which currently grants duty-free access to Bangladeshi apparel and footwear under its Everything but Arms initiative for LDCs.
The EU is Bangladesh’s biggest export destination, accounting for nearly 47 percent of total exports in 2024. The United States follows at 16.15 percent of total exports, with other developed markets at 15 percent. Canada and Japan together account for around 5.82 percent.
Post-graduation, Canada is projected to contribute 8.6 percent of the total export decline, while the United Kingdom would account for 6.9 percent.
The loss of preferential market access conditions can result in a substantial decrease in exports of preference-receiving countries as evident in projection for fellow graduating nations.
According to the UNCTAD report, Lao PDR is projected to see a 12.8 percent decline in exports, and Nepal a 3.82 percent drop.
FTAs AND TRANSITION DEALS
The report noted that several graduating LDCs have moved to negotiate free trade agreements (FTAs) with key partners to lock in tariff preferences beyond their LDC status.
For instance, Bangladesh has initiated FTA talks with both Japan and the EU, among others.
However, the report cautioned that reciprocal trade agreements come with their own costs, requiring countries to open their own markets, potentially raising competition, triggering adjustment pressures and reducing customs revenues.
Countries with limited market power, it added, often face challenges in effectively negotiating and achieving their economic interests in trade negotiations with partners that enjoy significantly greater markets
UNCTAD noted that with 14 LDCs nearing graduation, smooth transitional arrangements are gaining traction.
The report noted that the EU, the United Kingdom and Canada have introduced mechanisms allowing graduating LDCs continued access to preferential treatment for three years after graduation, offering some cushion against abrupt trade shocks.
The EU has also moved to reform its GSP+ scheme to improve accessibility for vulnerable economies, including future LDC graduates. Some of the recent reforms aim to better accommodate populous graduating LDCs such as Bangladesh.
Meanwhile, the UK and Canada have introduced analogous preference programmes of their own, titled “Enhanced Preferences” and General Preferential Tariff Plus (GPTP), respectively.
‘STRUCTURAL WEAKNESSES EXPOSED’
Economists say the findings should serve as a wake-up call.
Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh (PRI), said the UNCTAD projections highlight how deeply the country’s trade competitiveness depends on preferential access.
“While this estimate does, on the surface, look very high, with more than 90 percent of exports benefiting from such preferences, the transition to a post-LDC regime will expose structural weaknesses, particularly our heavy reliance on a narrow set of products and markets,” he said.
Rahman said the message is clear: graduation cannot be treated as a symbolic achievement alone.
“It must be accompanied by urgent and credible reforms: securing trade agreements, especially with the EU, improving logistics and energy reliability, and enabling firms to move up the value chain. Without this, preference erosion could translate into real economic stress.
“With the right reforms, however, graduation can become a turning point towards a more resilient and competitive export economy,” he added.
Mahmudul Hasan
Bangladesh could lose more than $17.5 billion in exports following its graduation from the least developed country (LDC) category, the steepest projected loss among all graduating nations globally, according to a new United Nations report.
The figure represents nearly a third of the country’s $54.8 billion in total exports recorded in 2023, according to the Trade Preferences Outlook 2025, published by the UN Conference on Trade and Development (UNCTAD).
“The trade effects of losing LDC preferences could be substantial in certain cases,” it said, projecting that Bangladesh can face a 32.24 percent decline in its total exports after it transitions to a developing country.
The warning comes just over six months before Bangladesh’s scheduled graduation on November 24, 2026. Nepal and Lao PDR are also scheduled to graduate this year, with the third and final review process by the UN currently underway ahead of the final transition.
The new BNP-led government, which took office in February, has sought a three-year deferral, pushing the graduation date to November 2029, citing disruptions in preparedness caused by prolonged global crises and domestic economic pressures.
The request came amid repeated calls from exporters who say the country is not yet prepared to compete without preferential trade access.
GARMENTS, FOOTWEAR TO BEAR THE BRUNT
The UNCTAD report, released in late February, found that around 97 percent of the projected export losses would stem from the apparel and footwear sectors – the twin pillars of Bangladesh’s export economy, which together account for nearly 90 percent of the country’s goods exports.
The European Union (EU) looms largest in the risk picture. Some 77 percent of the total projected loss is linked to preference erosion in the EU market, which currently grants duty-free access to Bangladeshi apparel and footwear under its Everything but Arms initiative for LDCs.
The EU is Bangladesh’s biggest export destination, accounting for nearly 47 percent of total exports in 2024. The United States follows at 16.15 percent of total exports, with other developed markets at 15 percent. Canada and Japan together account for around 5.82 percent.
Post-graduation, Canada is projected to contribute 8.6 percent of the total export decline, while the United Kingdom would account for 6.9 percent.
The loss of preferential market access conditions can result in a substantial decrease in exports of preference-receiving countries as evident in projection for fellow graduating nations.
According to the UNCTAD report, Lao PDR is projected to see a 12.8 percent decline in exports, and Nepal a 3.82 percent drop.
FTAs AND TRANSITION DEALS
The report noted that several graduating LDCs have moved to negotiate free trade agreements (FTAs) with key partners to lock in tariff preferences beyond their LDC status.
For instance, Bangladesh has initiated FTA talks with both Japan and the EU, among others.
However, the report cautioned that reciprocal trade agreements come with their own costs, requiring countries to open their own markets, potentially raising competition, triggering adjustment pressures and reducing customs revenues.
Countries with limited market power, it added, often face challenges in effectively negotiating and achieving their economic interests in trade negotiations with partners that enjoy significantly greater markets
UNCTAD noted that with 14 LDCs nearing graduation, smooth transitional arrangements are gaining traction.
The report noted that the EU, the United Kingdom and Canada have introduced mechanisms allowing graduating LDCs continued access to preferential treatment for three years after graduation, offering some cushion against abrupt trade shocks.
The EU has also moved to reform its GSP+ scheme to improve accessibility for vulnerable economies, including future LDC graduates. Some of the recent reforms aim to better accommodate populous graduating LDCs such as Bangladesh.
Meanwhile, the UK and Canada have introduced analogous preference programmes of their own, titled “Enhanced Preferences” and General Preferential Tariff Plus (GPTP), respectively.
‘STRUCTURAL WEAKNESSES EXPOSED’
Economists say the findings should serve as a wake-up call.
Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh (PRI), said the UNCTAD projections highlight how deeply the country’s trade competitiveness depends on preferential access.
“While this estimate does, on the surface, look very high, with more than 90 percent of exports benefiting from such preferences, the transition to a post-LDC regime will expose structural weaknesses, particularly our heavy reliance on a narrow set of products and markets,” he said.
Rahman said the message is clear: graduation cannot be treated as a symbolic achievement alone.
“It must be accompanied by urgent and credible reforms: securing trade agreements, especially with the EU, improving logistics and energy reliability, and enabling firms to move up the value chain. Without this, preference erosion could translate into real economic stress.
“With the right reforms, however, graduation can become a turning point towards a more resilient and competitive export economy,” he added.
