June 17, 2024

Bangladesh Exports May Shrink Up To 14% Post LDC Graduation

After its graduation from a least developed country (LDC) in 2026, exports from Bangladesh are expected to drop between 5.5 and 14 percent, due to the country losing its preferential trade benefits.

According to an Asian Development Bank (ADB) study, over 70 percent of the country’s merchandise exports currently benefit from LDC-specific trade preferences.

“The impact of Bangladesh’s impending LDC graduation on its export sector, particularly the dominant garments industry, is a significant concern,” the bank observed.

Post-graduation, Bangladesh may lose these preferences and be subject to less favourable trade conditions or Most Favored Nation (MFN) tariff rates depending on trade policies of various countries.

“Several studies show that increased tariffs could potentially result in a significant decrease in Bangladesh’s exports because of LDC graduation,” ADB added

“LDC graduation will also restrict Bangladesh’s policy space in bolstering the export sector through subsidies,” the bank stated.

In general, WTO members are normally barred from providing export subsidies, LDCs however are granted exemptions from this regulation.

The biggest impact of LDC graduation will be on the apparel export sector. Garment exports account for nearly 85 percent of Bangladesh’s total exports and 10.35 percent of its GDP.

In fiscal 2022-23, clothing accounted for 84.58 percent of all export receipts, earning a record US $47.38 billion.

In addition, this achievement played a part in taking the country’s overall exports in fiscal 2022-23 to another record-high of $55.56 billion.

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