What Happened
Bangladesh has officially met the criteria to graduate from the Least Developed Country (LDC) status, with the transition scheduled for November 2026. However, a recent independent assessment commissioned by the United Nations (UN) has highlighted significant gaps in trade readiness, macroeconomic stability, and institutional strength that could jeopardize a smooth transition. The report, prepared at the request of the interim government, indicates that political instability and governance disruptions have hindered necessary reforms.
Why It Matters
The implications of this graduation are profound, particularly for key sectors such as apparel and pharmaceuticals, which currently benefit from zero-duty access for 73% of exports under LDC provisions. Following graduation, exporters may face tariffs of approximately 12.5% in the European Union, potentially resulting in a loss of up to 14% of exports, or $8 billion annually. Business leaders have urged the interim government to seek a delay of up to six years to better prepare for the transition.
What’s Next
Bangladesh’s request for a deferment will be discussed at the UN Committee for Development Policy (CDP) meeting in New York. The evaluation process will consider recent socio-economic data and the implementation of the Smooth Transition Strategy (STS). The outcome of this discussion will be critical in determining whether Bangladesh will proceed with its scheduled graduation or receive an extension to address its economic challenges.
