Asia-Pacific least developed countries (AP LDCs) have generally demonstrated socioeconomic progress over the past decades, despite being among the most vulnerable and structurally disadvantaged countries. The resilience demonstrated by these countries is remarkable, particularly those now approaching LDC graduation. Among the seven LDCs scheduled to graduate by 2026, five (Bhutan in 2023, the Solomon Islands in 2024, and Bangladesh, Lao People’s Democratic Republic and Nepal in 2026) are from the Asia-Pacific region (UNCDP, 2021).

Although graduation is a development milestone, the transition gives rise to concerns that these countries may lose access to various international support measures (ISMs) associated with LDC status. Once graduated, they could lose access to LDC-specific trade preferences, including unilateral duty-free market access and less stringent rules of origin requirements in major importing countries.

This policy paper assesses the implications of graduation for AP LDCs in two broad areas: trade preference and development finance. It draws on secondary data and information, reports published by United Nations organizations and other institutes, and country-specific government documents to gauge the extent of preference erosion and the potential loss of concessional development finance arising from individual AP LDC’s graduation.