Nepal may lose 132,000 existing jobs — about half of them held by women — and incur nearly $1 billion in economic losses over five years following its graduation from Least Developed Country, or LDC, to a developing country in November 2026, a report unveiled on March 16 said.

The job losses — 67,000 among men and 65,000 among women — would largely stem from export declines linked to the end of LDC-specific trade benefits.

The report, Employment Impact Assessment on Nepal's LDC Graduation, released by the International Labour Organization, or ILO, warns that both exports and jobs are at risk and urges Nepal to prepare for a smooth transition. It says that to offset potential income and employment losses, Nepal will need to increase investments and strengthen its economic competitiveness.

According to the report, the largest decline in employment is expected in the manufacturing sector, where around 142,000 jobs could be affected. This trend may place additional pressure on the government to not only create new manufacturing jobs but also recover the employment losses anticipated in the sector.

The share of female manufacturing jobs lost is estimated to be almost equal to that of male workers, despite women already having significantly lower labor force participation rates. The findings point to the vulnerability of women workers in labor-intensive export sectors.

More urban jobs are projected to be lost than rural ones, and the share of urban jobs lost among women is almost double that among men. These patterns could trigger reverse migration of urban women to rural areas, where employment is typically informal, less productive and often unpaid.

Numan Ozcan, director of the ILO Country Office for Nepal, said the country's transition out of LDC status in November this year represents a major turning point.

"But it's not the end. It is a transition into a more competitive environment with fewer international support measures and higher expectations," he said. "That can sound very technical, but it can also become very real and very personal."

"Maybe not for the people sitting in this meeting room, but for business owners, factory workers, and workers in small shops, hotels, transport or the informal economy. It can become very real and personal," he said.

"The real test is how Nepal can translate graduation into better jobs, stronger enterprises and greater economic security for everyone."

The report estimates export losses of around 2.5 percent to 4.3 percent of total exports, depending on markets and products. The losses are expected to hit export-oriented manufacturing sectors, particularly apparel, textiles and carpets, which already face high transport costs and stiff international competition.

Through simulated policy scenarios, the report suggests that targeted investments could help offset GDP losses and generate employment, particularly through improvements in trade facilitation, tourism, and the information and communications technology, or ICT, sector. However, the report emphasizes that policy choices and timing will be critical.