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The report highlighted a series of disruptions between 2017 and 2026, including climate vulnerability, the Rohingya crisis, a prolonged macroeconomic slowdown that predated the regime change, the Covid-19 pandemic, the Russia-Ukraine war, inflation, and pressure on the balance of payments.

It also noted that while Bangladesh meets all three criteria for graduation, significant risks persist, including the loss of trade preferences, fiscal and financial vulnerabilities and weak institutional coordination.

The report stressed the need for urgent reforms, stronger implementation capacity, adequate policy space and a whole-of-society approach to ensure a smooth and sustainable transition.

It added that a difficult political changeover and prolonged macroeconomic stress have eroded socio-economic gains, increasing risks linked to graduation.

Rising import costs for fossil fuels have created operational constraints, with gas shortages worsening due to the Middle East conflict, the report said. Economic growth slowed from 7.1 percent in FY22 to 3.5 percent in FY25, weakening momentum ahead of graduation.

Inflation has outpaced wages, pushing millions into hardship and vulnerability.

Private investment has also weakened, with capital machinery imports falling from $5.1 billion to $2.8 billion during the 2019-2024 period. The labour market has also come under pressure, with nearly 1.9 million jobs lost between 2023 and 2024, disproportionately affecting women.

The financial sector remains fragile, with non-performing loans currently rising to 30.8 percent.

Fiscal space is also constrained, as revenue stands at just 6.8 percent of GDP, while interest payments absorb 36 percent of tax revenue. This has pushed the country’s debt distress risk from low to moderate.

Exports have declined for eight consecutive months, with US tariffs and volatile global trade conditions adding further pressure.

The report said that Bangladesh’s readiness for the loss of trade-related support measures remains weak, with nearly 75 percent of exports dependent on LDC-specific duty-free access.

A recent UN Trade and Development assessment estimated that Bangladesh could lose more than $17.5 billion in annual exports after graduation.

Ambassador Salahuddin Noman Chowdhury, Bangladesh’s permanent representative to the United Nations, on Thursday urged the UN to allow more time for the country’s transition out of the LDC category, citing global economic and geopolitical instability.

Speaking during the general debate of the “ECOSOC Financing for Development Forum 2026” at UN headquarters in New York, he said geopolitical conflicts, shrinking aid, climate shocks and energy uncertainty are making it increasingly difficult for graduating countries to prepare for life after LDC status.