What if we graduate from LDC next year? Or three years later?

If our LDC (Least Developed Country) graduation occurs in 2026, 93% of the export market will remain unchanged until 2029.

Within this period, the EU, Canada, the UK, and Turkey will provide GSP (Generalised Scheme of Preferences) facilities until 2029. China will provide GSP even after graduation, and the US does not give us duty-free access. Duty-free access will remain in effect in Japan under the EBA (Everything But Arms) scheme. These markets account for 93% of Bangladesh's total exports.

If Bangladesh delays LDC graduation by three years, it will receive duty-free facilities in these markets, including the EU, until 2032.

There is an opportunity to receive GSP Plus in the EU three years after graduation. Even if that is received, Bangladesh's garments sector will not benefit. The Awami League government had started negotiations so that Bangladesh's garment sector could receive the GSP Plus benefit. That discussion has lost momentum during the interim government's term.

Since the EU is working to finalise the new GSP Plus scheme, Bangladesh must prioritise discussions on this matter.

"If Bangladesh graduates in 2026, it will have the opportunity to bargain over the EU GSP Plus scheme; if graduation is delayed by three years, this opportunity will not exist," a trade analyst, who preferred not to be named, said.

"In this case, we must consider whether the advantage is greater if we graduate next year or if we graduate three years later," he suggested.

Explaining, he said, if graduation occurs in 2029, the LDC benefit will be available for an extra three years, but the garment sector will not receive duty-free access under the EU GSP Plus scheme after 2032. If graduation occurs in 2026, there is an opportunity for the garment sector to receive duty-free access under the EU GSP Plus scheme after 2029. This facility will remain in force until Bangladesh transitions to an upper-middle-income country, which is expected to take approximately 30 to 35 years.

Moreover, the government spends about Tk 8,500 crore annually on export incentives. If this money is spent on increasing industrial capacity after LDC graduation, it will be possible to meet the challenges.

Several countries have delayed graduation at various times, but none of them did so because they dropped below the status of fulfilling the United Nations criteria.

One such country is Angola, which was preparing for graduation by fulfilling only the GNI per capita criterion among the three UN criteria. Due to a sudden drop in international oil prices, Angola's GNI per capita, which relies on oil exports, fell below the UN's graduation threshold. In this context, UNCDP (United Nations Committee for Development Policy) postponed Angola's graduation.

And the Solomon Islands was preparing to graduate by fulfilling the GNI per capita and Economic Vulnerability Index criteria. Shortly before the UN session where their graduation was supposed to be approved, a natural disaster occurred, increasing their economic vulnerability to 88 points, which is much higher than the UN's condition. In this context, the President of the Solomon Islands directly participated in the UN session and advocated for postponing their graduation by highlighting their country's economic vulnerability, which member states approved.

Mission vs Reality

The Bangladesh Country Report 2025, which explained the country's economic performance and preparations to the United Nations, elaborated on the crucial challenges on its path toward sustainable graduation from LDC status. But the report's foreword presents a different picture, drawing comparison with countries with similar experiences to state that Bangladesh is better positioned to manage its LDC graduation and progress towards the Sustainable Development Goals.

In its foreword, the report prepared by Economic Relations Division (ERD) has drawn instances from post-uprising growth and inflation scenario of Iran in 1979 and Indonesia in 1998, along with toppling of Sri Lankan regime in 2022 to note that Bangladesh's macroeconomic performance post-2024 uprising regime change is unique compared to those countries. "While these countries experienced sharp declines in output and foreign direct investment (FDI) and a rise in inflation, Bangladesh continues to maintain positive output and FDI growth and declines in inflation," reads the introduction.

"As a result," it argues, "Bangladesh could avoid any significant development setbacks, whereas in Indonesia, the poverty rate jumped from around 15% to around 33% in one year, and in Sri Lanka, around 26% lived in poverty in 2023, a year after the violent fall of the regime."

Though inflation declined significantly after a year since the fall of the Awami League government through July-August uprising in 2024, Bangladesh lags behind Sri Lanka. The inflation rate was at its historic peak of 11.66% in July 2024, which dropped to 8.17% in October this year. The World Bank says Sri Lanka succeeded in bringing down its inflation from around 70% to single digits in mid-2023-- within one year of the collapse of its government amid violent demonstrations. External buffers were built with its usable reserves rising to $4.7 billion by end-2024 from $500 million at end-2022. Bangladesh's gross reserves has also seen a rebound—from $26.71 billion at end FY24 to $32 billion on 25 October 2025, says the report submitted to UNCDP early this month.

The current account balance has also substantially improved in FY25 driven by higher remittance and narrower trade deficit, it points out.

Though the Bangladesh Bank's monetary tightening resulted in remarkable success in rebuilding foreign exchange reserves, checking currency flight through money laundering, and stabilising exchange market, the success in taming inflation remains limited in more than a year since the collapse of the past regime if compared with Sri Lankan for instance.  

The success Bangladesh so far made in poverty reduction now looks fading away, with the World Bank's latest Bangladesh Poverty and Equity Assessment report reveals that over one-third of Bangladesh's population remained vulnerable to falling back into poverty as the country's poverty fight slowed since 2016. High vulnerability to shocks translated into rising poverty amid elevated inflation and job losses during 2022-2025, leaving 62 million Bangladeshis just above the poverty line with unstable consumption, limited savings, and inadequate social protection. Over 2022-2025, labor incomes weakened due to slow job creation and slower real earnings growth for less-skilled workers. Employment fell by nearly 2 million from 2023 to 2024, with a further decline of 0.8 million expected in 2025. Women and youth were hardest hit by these job losses. Inflation outpaced wage growth for the poorest, with 2025 price increases more than double those during the COVID-19 pandemic. As a result, poverty is projected to have increased from 18.7% in 2022 to 21.2% in 2025, says the report released on 25 November.

The economic reality has been well documented in the government's report to the UN Committee for Development Policy which monitors Bangladesh's preparation for and progress towards LDC graduation. It refers to growth slowdown and weakened private investment, which, it says, "reflects continued macroeconomic pressures, subdued domestic demand and lower external trade, indicating that the economy is undergoing a period of adjustment and stabilization after several years of robust expansion."

Among areas of concern, it cites "persistently elevated" inflation and rising unemployment among educated youths, while persisting revenue shortfall challenges such as economic growth and a sluggish investment situation.

"The banking sector in Bangladesh is in a fragile state due to a huge non-performing loans (NPL) build-up during the previous repressive regime," the ERD report says, referring to the central bank's reform initiatives to restore corporate discipline.     

The country report has also listed development challenges faced by Bangladesh—elevated poverty concentration in specific regions such as Barishal because of exposure to climate vulnerabilities, energy shortage, lack of economic diversification and limited infrastructures.  It expresses concern about how the shadow of US reciprocal tariff uncertainty weighs heavily on Bangladesh's export prospects, business confidence and supply chain.

Yet, the report states that Bangladesh continues to meet all the three graduation criteria as reaffirmed by the UN-CDP Report. "The country, therefore, remains on track to officially leave the LDC category on 24 November 2026, upon completion of the five-year preparatory period that began in 2021," reads the introduction of the report.

This government has also made it clear that it will not apply to the UN to postpone LDC graduation for political reasons. The government believes that if they apply to postpone graduation, the Awami League will be able to accuse the Yunus government of pushing the country backwards economically. Therefore, just as the government does not want to postpone it, the introduction of the report has been arranged in such a way that there is no mention of Bangladesh feeling challenged if LDC graduation occurs. It shows that the economy has turned around since last June, recovering from the wounds created during the previous government's tenure. Growth is increasing, inflation is decreasing, and the banking sector has stabilised.