Bangladesh and ADB

ADB’s support for Bangladesh advances climate resilience and socioeconomic recovery from external shocks with a focus on job creation, social protection, and sustainable infrastructure and development.

Economic forecasts for Bangladesh

Figures are based on the latest edition of ADB's Asian Development Outlook, which analyzes economic and development issues in Asia and the Pacific. This includes forecasting the inflation and gross domestic product growth rates of economies throughout the region.


 

Comparative economic forecasts

The latest available economic data for Bangladesh compared to countries in South Asia.


 

Policy Challenge—Overcoming the Challenges of Graduation from Least-Developed Country Status

Bangladesh is on track to graduate from the group of least-developed countries (LDCs) in 2026, but the transition poses challenges. This milestone in the country’s economic development necessitates careful preparation, as the post-LDC period involves the conclusion or significant reduction of many international support measures received as an LDC. Graduation involves three key economic implications that affect the nation’s capacity to export and attract investments. First, policy flexibility granted under special treatment in World Trade Organization (WTO) agreements may be lost. LDC graduation would limit policy space and flexibility in compliance with WTO rules. Subsidies for exporters may cease due to WTO subsidy rules, and full enforcement of trade-related aspects of intellectual property rights could hinder Bangladesh’s pharmaceutical self-sufficiency, jeopardizing 98% of local demand previously met through patent waivers. Second, some development financing may shift from grants to loans on concessional terms, though grant assistance could still be available depending on the areas of cooperation. After graduation, Bangladesh may encounter challenges in accessing certain LDC-specific funds unless terms of engagement are adjusted in response to a reduction in the overall number of LDCs. Third, and perhaps more importantly, preferential access to export destinations, including through duty-free and quota-free schemes and LDC-specific preferential rules of origin, may be lost.

As more than 70% of merchandise exports currently enjoy trade preferences, imminent graduation poses significant concerns for exports. This especially applies to the country’s ready-made garments, which constitute more than 83% of total exports. This industry has successfully expanded its market share in major importing countries, capitalizing on trade preferences. Following graduation, Bangladesh may lose these preferences and face less-favorable trade conditions, or most favored nation tariff rates, contingent on the trade policies of receiving countries. According to a WTO estimate, post-graduation tariff hikes could lead to a 14% decline in exports.

Smooth and sustainable graduation would require enhanced trade and investment competitiveness. This task becomes exceedingly challenging without substantial foreign direct investment (FDI), considering that current FDI equals less than 1% of GDP. Inadequate infrastructure, underdeveloped logistics, cumbersome border processes, an opaque regulatory environment, and a lack of integration between trade and industrial policies are major deterrents to FDI. A high tariff regime poses a significant constraint to the goal of fostering a diversified, export-oriented industry base through FDI and collaboration between foreign and domestic investors.

Recognizing the need for competitiveness, the authorities are taking necessary steps. Seven subcommittees under the Prime Minister’s office are addressing market access and trade agreements, intellectual property rights, WTO issues, investment, domestic market development, export diversification, internal resource mobilization, tariff rationalization, and branding. The government has adopted for the first time a National Tariff Policy, 2023 (NTP 2023) to address various policy-induced disincentives and undertake pertinent reform measures to comply with WTO obligations. The Bangladesh Investment Development Authority has initiated its Business Investment Climate Improvement Program. The Bangladesh Economic Zones Authority is developing 100 special economic zones. The government is developing a model bilateral investment treaty to facilitate negotiations. To graduate with momentum, Bangladesh is preparing a smooth transition strategy that will guide the various policy actions.

Additional measures are required to tackle graduation challenges. The implementation of NTP 2023 needs to be closely monitored by the LDC graduation subcommittee on internal resource mobilization and tariff rationalization, as trade liberalization and tariff rationalization are two primary objectives of the policy. Through tariff rationalization, the NTP 2023 can help tackle various policy-induced disincentives to exports, reduce tariff complexity, and ensure a WTO-compliant tariff regime. Proper implementation of the NTP 2023 will contribute to establishing a predictable tariff regime, as envisioned in the policy, which will further attract investment. Proactive and bilateral engagement with key export markets should be ensured to retain favorable market access terms even after LDC graduation. To provide WTO-compliant export support measures, it would be helpful to learn from experience of other developing countries, such as the People’s Republic of China and Viet Nam. Further, the implementation of the Business Investment Climate Improvement Program should be accelerated to facilitate investment and boost investor confidence. Existing investment treaties should be modernized and considered for renegotiation in line with the evolving market dynamics. Focus should be given to fully operationalizing a few economic zones to set examples for future ones. To prepare for LDC graduation and beyond, Bangladesh should undertake a comprehensive capacity-building program in such areas as trade policy and negotiation, investment, logistics, standards and testing, and intellectual property rights.

More resources

Asian Development Bank and Bangladesh: Fact Sheet

Asian Development Bank and Bangladesh: Fact Sheet

The Fact Sheets summarize ADB's partnerships with member economies, providing key facts and figures and an overview of activities and future directions.

Asian Development Outlook (ADO) April 2024

Asian Development Outlook

The Asian Development Outlook analyzes economic and development issues in developing countries in Asia.

Key Indicators for Asia and the Pacific 2023

Key Indicators

The Key Indicators for Asia and the Pacific publication presents data regarding the economic, financial, social, and environmental situations in a broad range of countries across the region.

Basic Statistics 2023

Basic Statistics

The Basic Statistics brochure presents data on selected social, economic, and SDG indicators such as population, poverty, annual growth rate of gross domestic product, inflation, and government finance for economies in Asia and the Pacific.