Exports may shrink up to 14% after LDC graduation
Exports from Bangladesh may decline by 5.5 percent to as much as 14 percent, especially considering reduced earnings from the EU, after the nation loses its preferential trade benefits following its graduation from a least developed country (LDC) in 2026, according to the Asian Development Bank.
With over 70 percent of the country's merchandise exports currently benefitting 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.
Post-graduation, Bangladesh may lose these preferences and be subject to less favourable trade conditions or Most Favored Nation (MFN) tariff rates depending on the trade policies of donor countries.
Several studies show that increased tariffs could potentially result in a significant decrease in Bangladesh's exports because of LDC graduation, the ADB said in a study on "Expanding and Diversifying Exports in Bangladesh: Challenges and the Way Forward" published in its March issue of ADB Brief.
LDC graduation will also restrict Bangladesh's policy space in bolstering the export sector through subsidies, the ADB said.
For instance, while World Trade Organization members are generally barred from providing export subsidies, LDCs are granted exemptions from this regulation.
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