Bangladesh’s economy is in crisis due to a number of factors, including political unpredictability, shortages of gas and power, growing inflation, high import duties, high loan interest rates and restricted credit availability to the private sector. Furthermore, income collection and foreign reserves are falling short of projections and neither new investments nor job creation is increasing. Concerns are growing over how Bangladesh would handle the country’s transition from Least Developed Country (LDC) status in November 2026 since there is no clear plan to overcome these obstacles.
Review of the LDC Graduation Timeline
The interim administration is dedicated to LDC graduation on November 24, 2026, despite business leaders’ requests for a two to three year extension. The administration is reevaluating the schedule, according to Dr. Anisuzzaman Chowdhury, Special Assistant to the Chief Adviser. A review committee is assessing the accuracy of historical economic data used to make the graduation decision. It’s possible that inaccurate information submitted to the UN affected the decision-making process.
Potential Economic Impact of LDC Graduation
- Loss of Duty-Free Export Benefits: 73% of Bangladesh’s total exports enjoy duty-free access, which will end post-LDC graduation.
- Estimated Export Decline: A $7 billion export loss is predicted due to higher tariffs in key markets.
- Competitive Pressure: Countries like Vietnam, benefiting from free trade agreements (FTAs), may push Bangladesh’s exports down by 21.2% in EU markets.
- Declining Foreign Reserves: Once at $45 billion in 2018, reserves have now dropped to $18 billion.
Business Leaders Urge Delayed Graduation
Tashkeen Ahmed the president of the Dhaka Chamber of Commerce and Industry (DCCI) claims that the manufacturing sector grew by 1.43% in the first quarter of 2024, while the country’s GDP grew by merely 1.8%. Leaders in the industry, such as BKMEA President Muhammad Hatem, caution that hastening LDC graduation could seriously harm industries and exports. It is necessary to update a graduation roadmap that is incorrect and based on out-of-date economic facts.
Read more: EU Impose $28 Billion Tariffs on U.S. Goods Amid Trade War
Export Sectors at Risk Post-LDC Graduation
- 1. Ready Made Garments (RMG) Sector
Currently dominates Bangladesh’s exports but lacks diversification. - No alternative incentives have been proposed to replace cash incentives post-LDC graduation.
2. Emerging Sectors Facing Challenges
- Bangladesh has yet to develop a strong policy framework for pharmaceuticals, leather, semiconductors, agro-processing and IT exports.
3. EU Market Disruptions
- Vietnam’s FTA with the EU means lower tariffs for its exports, while Bangladesh will face higher duties.
- 48% of Bangladesh’s total exports go to the EU, making tariff increases a major concern.
Will Bangladesh Be Ready for LDC Graduation?
Experts emphasize that a clear transition plan is desperately needed, even if the government has established an interministerial committee to investigate alternate export incentives.
Recommended External Resources
- World Trade Organization (WTO) on LDC Graduation
- United Nations on Sustainable Development Goals
Conclusion
Although Bangladesh’s LDC graduation is an important milestone. The economy could suffer if it is hurried into it unprepared. Business executives stress that a seamless transition into a developing country will depend on postponing the changeover and implementing a more robust economic plan.
Source: News24
