Employment Impact Assessment on Nepal’s LDC Graduation

Nepal is set to graduate from Least Developed Country (LDC) status in November 2026, raising concerns about potential job losses and broader economic impacts. While the country has made steady progress in expanding employment despite structural constraints such as high transport costs, limited access to capital, and challenging geography, its manufacturing sector remains vulnerable. High production costs, dependence on imported raw materials, and intense regional competition continue to strain key export industries.

Graduation may further heighten these pressures, making it essential not only to create new jobs for a growing workforce but also to safeguard existing ones. The risk of employment losses is one dimension of a broader and complex transition that demands comprehensive policy responses.

The Employment Impact Assessment examines sectors at risk, estimates potential job losses and gains, and analyses effects on vulnerable groups. It explores the relationship between trade and employment in the context of graduation, assessing both demand-side factors such as changes in trade preferences, including GSP+, and shifting global demand for garments and carpets—and supply-side constraints, including Nepal’s competitiveness and human capital needs. The study also evaluates direct, indirect, and induced employment effects across the economy.